What Happened?
Shares of work management platform monday.com (NASDAQ: MNDY) fell 3.9% in the morning session after Bank of America downgraded the stock from "Buy" to "Neutral".
The bank also lowered its price target on the stock to $205 from $240. The downgrade reflects growing concerns over the company's SEO-driven web traffic, which has reportedly seen a notable decline. According to the BofA Securities analyst, there is also potential for future revenue pressure on the company as search engines continue to integrate artificial intelligence. This shift in technology could impact how customers discover and interact with Monday.com's platform.
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What Is The Market Telling Us
monday.com’s shares are very volatile and have had 29 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago when the stock gained 3.7% on the news that the SaaS sector continued to rally as favorable inflation data bolstered hopes for a Federal Reserve interest rate cut. This optimism was largely driven by a benign July Consumer Price Index (CPI) report, which solidified investor expectations for a Federal Reserve interest rate cut. Following the release of the inflation data, which showed a year-over-year increase of 2.7%, the probability of a rate cut in September surged to over 96%. Lower interest rates are typically beneficial for growth-oriented technology stocks, as they can reduce borrowing costs and increase the present value of future earnings. Adding to the positive sentiment was a 90-day delay in the imposition of higher tariffs on Chinese goods, which reduced trade-related uncertainty for the technology sector.
monday.com is down 26% since the beginning of the year, and at $170.98 per share, it is trading 47.9% below its 52-week high of $327.92 from February 2025. Investors who bought $1,000 worth of monday.com’s shares at the IPO in June 2021 would now be looking at an investment worth $955.89.
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