Monday.com Stock Analysis: Buy or Sell? | MNDY Stock Analysis

Ajouté : 2026-05-19

[00:00:00]Monday.com reported quarterly revenue of 351 million, which was up 24% year-over-year.

[00:00:08]Investors want to know if this stock is a buying opportunity or one of the stocks that AI is going to eliminate.

[00:00:15]And I'll answer that question in this video.

[00:00:18]I want to thank The Motley Fool for sponsoring this video. Visit for the 10 best stocks to buy now. So, the management team at monday.com said that the launch of their AI work platform and their shift to consumption-based pricing is building momentum on the platform.

[00:00:39]And I've seen this at several companies now, including Microsoft and other bigger companies that are moving towards consumption-based pricing or a hybrid approach. Previously, many of these software-type companies were selling their products on a per-seat basis, meaning a per-individual basis. If a company had 25 employees, they would pay 25 times X, whatever the monthly or annual fee to access the service.

[00:01:11]Nowadays, artificial intelligence is changing that landscape because of agentic workflow. Companies are doing more with fewer people, and so the per-seat pricing model is changing. And businesses are shifting towards the consumption-based pricing so that they can more accurately charge enterprises [clears throat] based on the value they're providing.

[00:01:38]And if one agent is working 24 hours a day, 7 days a week, 52 weeks a year, doing all of these tasks, then you want to be able to charge that customer based on that extensive usage. And so, companies are shifting towards this model. I'm seeing this uh across the board now. It's gaining momentum. And it remains to be seen if this consumption-based pricing model can be as lucrative for the software industry as the per seat model was.

[00:02:12]Remember, software stocks gained a lot of momentum in recent years because they were all so profitable. Well, I shouldn't say all, but at larger scale, many of these companies were extremely profitable. And so, investors are concerned about the shift in business model and how that will impact margins.

[00:02:32]For monday.com, the first quarter was strong across every financial dimension with the CFO saying that revenue, profit margins, and cash flow all came in ahead of expectations.

[00:02:44]The AI productivity gains they're seeing inside their own organization are demonstrating that we can grow revenue without growing headcount. And this is another theme I'm seeing across the board here in the 2026 with the earnings results coming out here. I'm seeing a lot of companies generating strong revenue growth without having to add that many employees. In fact, some companies actually increased revenue by 20-30% without adding any headcount or actually letting go of people and still generating that kind of revenue growth.

[00:03:19]So, these are the early signs that artificial intelligence is increasing productivity.

[00:03:25]And you know, it's called artificial intelligence, but a lot of time I just see these things as automation. Just automating work that was previously done manually by individuals, which took more time to complete a task. It's now being done through automation, and that's allowing one worker to complete a lot more work previously needed which needed more time.

[00:03:51]>> [snorts] >> So, that's the underlying trends that I'm seeing throughout this first and second quarter of 2026. So, in addition to revenue increasing, their operating income almost doubled to 19.8 million compared to 9.8 million in the first quarter of 2025.

[00:04:13]So, not only are they generating better revenue, they're also improving their profitability at a larger scale. One concern was the cash flow from operations, which came in at 105 million in the most recently completed quarter compared to 112 million in the same quarter last year.

[00:04:31]Cash flow from operations is more volatile than some of these other metrics including operating income because of timing differences. You know, when you pay your accounts receivable and accounts and when you get your accounts accounts payable, the timing of those working capital changes could impact cash flow from operations without necessarily giving you an indication of where the business is heading. The net dollar retention rate was 110%.

[00:05:01]And this means that existing customers in their second year of service spent 10% more than they did in their first year of service with monday.com. And that's always a good sign for the customer value proposition. Their total remaining performance obligations, which eventually turn into revenue, increased by 33%, which is a good sign when the total remaining performance obligations increases by more than revenue increases. And the company used a significant amount of its cash on the balance sheet to buy back stock, which is an indication to me that the management team feels the stock is undervalued. Speaking of valuation, I also think the stock is undervalued when measuring on a forward price to earnings at 14.7, it's the lowest the stock has traded for in many years. Similarly, on a forward price to operating cash flow, also near the lowest it's traded at in several years.

[00:05:54]And when I calculated an intrinsic value using my discounted cash flow model, I came to a similar conclusion that the stock looks undervalued. I could say meaningfully undervalued at a market price of $71 compared to my intrinsic value of 136.

[00:06:10]Of course, the overhang, the big cloud over the company is how it's going to be impacted by AI. Will its customers switch away from monday.com and use some of these solutions provided by Anthropic and OpenAI and other AI services? That's the big risk. Uh withstanding that, the valuation itself looks very attractive. And so, I had the stock rated as a buy. I last updated it on April 10th. The stock is up over 15% in that month since I rated the stock as a buy. And today, I will reiterate that buy rating for monday.com.