Why MongoDB Stock Fell Today Despite a Bullish Analyst Note

What happened

When a stock is reviewed positively by an analyst, it usually gets at least a small bump in its price. That, sadly, wasn’t the case with MongoDB (MDB -3.29%) on Thursday. The company’s shares shed more than 3% of their value across the day, despite a glowing new note from a top American bank.

So what

MongoDB is very much on the radar of Citigroup (C -2.96%), whose analyst Tyler Radke designated it a top pick in the software segment. In a research note detailing the reasons why, Radke expressed admiration for the company’s growth potential, writing that recent fundamentals bring “the focus back to its longer-term attractive growth story having one of the largest [total addressable markets] in software.”

Many analysts are — or, prior to Thursday, were — very bullish on MongoDB. Earlier this month the company published its third quarter of fiscal 2023 results, which trounced analyst expectations for both revenue and profitability. In fact, the company’s nearly $19 million ($0.23 per share) in non-GAAP (adjusted) net income was in sharp contrast to the average prognosticator estimate of a per-share loss of $0.17.

Radke’s new take on MongoDB comes a day after his peer Taz Koujalgi at Wedbush initiated coverage of the company’s stock with an outperform (read: buy) recommendation and a $240 price target. 

Now what

Despite the justifiably optimistic new evaluations of MongoDB, in some ways the company’s stock is a victim of its success.

The share price popped after those results were unveiled, not least because investors were hungry for any good news, anywhere in the beleaguered tech sector. Yet the market is still cautious at best and pessimistic at worst about the industry’s immediate future, and it seems this sentiment has even started to affect MongoDB — regardless of its recent outperformance and those glowing analyst takes.