Monday.com Stock Loses 15% as Guidance Disappoints Wall Street Expectations

Strong Quarterly Results Overshadowed by Forward Outlook

Enterprise software platform Monday.com (NASDAQ: MNDY) delivered mixed signals to the market this week, with shares declining over 15% despite posting respectable third-quarter results. The disconnect between solid historical performance and weak future projections created a sell-off that surprised many observers tracking the company.

The firm’s Q3 financials showed genuine strength on the surface. Revenue increased 26% year-over-year to approximately $317 million, exceeding the average analyst consensus of just over $312 million. The bottom line also improved substantially, with the company reporting $13 million in net income under GAAP accounting principles, compared to a loss of more than $12 million in the prior-year period. On an adjusted basis, earnings per share reached $1.16, significantly outpacing the consensus estimate of $0.88 and the year-ago figure of $0.85.

The Problem: Forward Revenue Projections

The real issue emerged when management outlined expectations for the current quarter. The company guided for Q4 revenue between $328 million and $330 million, falling short of Wall Street’s average forecast of just under $334 million. This guidance miss proved sufficient to trigger a sharp market reaction, with influential analysts from major financial institutions reassessing their positions on the stock.

Notable firms including Morgan Stanley and Citigroup subsequently reduced their price targets on the company. This pattern reflects a broader investor sensitivity around tech sector valuations—growth prospects remain central to how markets price software and technology enterprises.

Putting the Decline in Perspective

The market’s reaction warrants scrutiny. Even the company’s reportedly disappointing fourth-quarter forecast still projects year-over-year revenue growth of at least 22%, a figure many mature businesses would celebrate. The sharp price decline appears disproportionate to the actual business fundamentals, suggesting that growth-focused investors may have overreacted to a relatively modest guidance shortfall rather than a deterioration in the underlying business.

The week’s pronounced sell-off could present an interesting entry point for investors seeking exposure to a maturing software company at a valuation discount.