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MongoDB: Valued Like A Penthouse

May 04, 2020 11:46 AM ETMongoDB, Inc. (MDB)ORCL23 Comments
Kayode Omotosho profile picture
Kayode Omotosho


  • MongoDB's growth factor will cost a lot to service.
  • While it plays into a lot of favorable near term trends, customer stickiness isn't assured.
  • Investors should either hold for the long term or trim their position.

Cartoon of the Day: Social Distancing - 04.27.2020 social distancing cartoon

Source: Hedgeye

MongoDB (NASDAQ:MDB) is the Snap (SNAP) of databases. Snap has been a short's favorite because the bulk of its features were successfully mimicked by competitors. While Snap has a joker in AR (augmented reality) to keep fighting for market share, no such card exists for MongoDB in the database world. Like Snap, MDB will have to spend a lot of cash to keep evolving, protecting, and distributing its technology.

As a result, MongoDB risks getting stuck on the defensive foot as it tries to appease both customers and shareholders. Given this execution risk, MongoDB is best acquired at a significantly lower price to the current trading value as it will continue to remain a volatile stock to own.

Demand (Rating: Bullish)

Source: Author (using data from Seeking Alpha )

Market opportunity

According to IDC, the database market is worth $71B in 2020. This is projected to expand to $97B by 2023. MongoDB currently captures less than 1% of its total addressable market. We can't yet conclude that MongoDB can touch every part of its potential market. Whichever direction it turns to, it will face serious rivalry from supercarriers like Google Cloud (GOOGL), Amazon (AMZN) AWS, and Microsoft (MSFT) Azure. The three largest cloud providers have the financial and technical wherewithal to fold any technology platform into their deck. For these cloud giants, it doesn't matter if the platform (competitor) is on their supply-side or if it merely sails as an adjunct to their demand side.


MongoDB addresses the flexibility and scalability issues of relational databases. It has garnered over 90 million downloads since inception, with strong popularity amongst app developers and NoSQL enthusiasts. It ranks within the top five databases on DB-engine, and it has consistently been the highest-ranked document store. MongoDB can also be likened to the

This article was written by

Kayode Omotosho profile picture
Kayode's strategy aligns only with businesses that have competitive moats, solid financials, good management, and minimal exposure to macro headwinds.-------------------------------------Coverage tilted towards tech stocks (IoT, Cybersecurity, Cloud, DevOps, Data management)

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (23)

Here is my simplistic view of MDB. I am a database guy and I invest in what is cool, new, and better. I like MDB and find it's users more advanced than other databases. I see it mostly in niches now. This will change over time, meaning lots more growth.
Kayode Omotosho profile picture
I appreciate the insight, tchis3
Now it is valued like palace as it is close to $200. Forget about penthouse!!!
Kayode Omotosho profile picture
Are you holding to $300?
Yes. Just day before yesterday I doubled the position. I believe by end of 2023 it will be in excess of $600. That’s my belief and I’m following that. I’m not telling like analysts who Recommend to buy or sell and next week another analyst says opposite to the 1st one. So now I’m following my own guts feelings.
When it will reach closer to $600 I will reassess the investment in MDB. You never know I might keep buying (obviously other stocks as well) MDB but don’t think I will sell before 2025 at least.
Thx for the article. Long from ipo... Used to work in the IT industry before retiring. This is overvalued like SHOP, AMZN, NFLX, etc. In other words, hold and win.
Why does everyone think Amazon is overvalued??? It's cheaper than Apple with a lot more growth... If valued similarly to Apple, we'd have the stock price above $3k, but for growth, we often give a premium multiple.
sirfatboy2014 profile picture
"Why does everyone think Amazon is overvalued???"

Because they're ignorant - all they can do is put on the tin foil hat and say "MUH THE P/E IS TOO HIGH!"
IntelligentConsensus profile picture
A lot of good food for thought in the article. A few issues I'm grappling with as an investor in this stock: If this is such a large market and important market, and MDB has a clear advantage as demonstrated by growth rates and developer preference, supported by a proven management team, then why shouldn't they be able to capture 5% share of a $100B market, equating to $5B in revenue? Applying a 5x and 10x multiple (P/S) to this results in a $25B to $50B valuation in the much longer term. Yes, all very back of the envelope and I'm not probability adjusting the numbers or time weighting anything. I'm jumping to the future and applying what seems like a reasonable multiple on a numerically small percentage of the TAM. Just wondering what are the larger and most relevant flaws to this long term view (I'm sure there are some), specific to MDB?
Kayode Omotosho profile picture
Monetizable market is different from total addressable market. If MDB can monetize an additional 1% of its market without spending a dime on SG&A , it will be worth a lot more.
I’d rather hang in the penthouse than be in the crapper!
TheLongTermInvestor profile picture
Dear author, go ahead and short the stock. You sure did a lot of work to come up with a Hold opinion.
Kayode Omotosho profile picture
I've learned not to stand in the way of a charging bull.
@Kayode Omotosho Right!
By the way, it won't last long
and the bulls will stand in the cold rain...
Your article is written well, based on facts.
@TheLongTermInvestor Being polite
the author dosn't want to hurt the bulls' feelings.
If I had written the article, I would have said:
Insane valuation.
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