State-of-the-art database software specialist MongoDB (NASDAQ: MDB) had a bad market day on Tuesday. The stock was down 13.9% at 11:45 a.m. ET despite an impressive third-quarter report. The stock initially benefited from the earnings news, but MongoDB investors quickly retreated a few minutes later when they noticed the company also announced a management change.
First things first: MongoDB’s third quarter revenue grew 22% year over year to $529 million. Earnings came in at $1.16 per share, compared to $0.96 per share in the same quarter last year. Your average analyst would have settled for earnings of about $0.67 per share on revenue of almost $498 million. So far, so good. Shares of MongoDB rose more than 10% in the first few minutes of after-hours trading.
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But the gains did not last. MongoDB’s stock chart fell sharply lower as investors took notice of the leadership update. Michael Gordon, former CFO and COO, will leave his MongoDB posts at the end of January and continue in an advisory role until a permanent replacement feels comfortable with the job.
Despite several analysts pressing for more information on the earnings figures, Gordon did not say whether he will retire or take a new job elsewhere. Either way, MongoDB is losing an important C-suite name after nearly a decade of service. It’s easy to understand why investors are nervous about this big change, especially since Gordon’s role includes both financial management and the day-to-day operations of the company. His successor (or successors, if the COO and CFO roles are split in 2025) will have some big shoes to fill.
At the same time, it’s easy to see how Gordon’s departure announcement was missed by half an hour. Placed among a long list of strong financial results and interesting business developments, the “executive leadership update” may seem like a minor point at first glance.
On a larger scale, MongoDB shares had been trading sideways for years despite rising sales and shrinking losses. The stock was probably overvalued five years ago, but its price-to-sales ratio is becoming quite comparable to its larger and more profitable (but slower-growing) database rival Oracle (NYSE: ORCL).
Today’s share price drop seems like an invitation to take a closer look at this promising growth stock. If nothing else, the mini-crash erased the price premium MongoDB earned from the Microsoft (NASDAQ: MSFT) partnership it announced last month.
