Is MongoDB (MDB) Stock the Next Big Short Squeeze?
One of the biggest movers in today’s market is MongoDB (NASDAQ:MDB), with shares of MDB stock jumping more than 22% at the time of writing.
This surge comes following the company’s rather impressive third-quarter earnings report. While analysts on Wall Street had expected a loss of 17 cents per share, MongoDB actually reported a positive adjusted profit of 23 cents per share. That massive 40-cent differential suggests the cloud database company has made the right moves toward profitability, something the market is valuing more highly these days.
The company also blew past revenue expectations, posting revenue of $333.6 million, compared to expectations of only $303.4 million. That’s good for a run rate of more than $1.3 billion, making the company’s valuation much more attractive for growth investors.
With MongoDB seemingly turning the corner, there’s clearly a fundamental case to be made as to why this stock is a solid investment right now. That said, a Baird analyst suggests that there’s also the potential for MDB stock to become a short-squeeze favorite, based on its high short interest and newfound positive sentiment around the stock from retail investors.
Let’s dive into whether MongoDB has what it takes to become the next big short squeeze.
Is MDB Stock Ready to Go on a Big Run?
MongoDB’s overall business model and seemingly stronger-than-expected fundamentals provide a clear bullish thesis for growth investors to consider this stock. This earnings report really is one of the best of the year, and suggests growth in the cloud space may be far from overdone.
That said, the recent comments from Baird analyst Raimo Lenschow are noteworthy. With more speculative interest entering the market over the past month, any talk of a short squeeze is going to garner attention. Indeed, there are plenty of retail investors who have been burned by other short-squeeze favorites this year. Thus, the opportunity to make back some losses is always enticing.
The reasons Lenschow cites for MongoDB’s short squeeze potential are the company’s better-than expected results as well as its Atlas product. As investors see more growth on the horizon, this could easily become a fan favorite. Adding fuel to the fire is the company’s Q4 and full-year operating profit guidance, which came in above expectations.
Thus, the thesis is relatively simple. If MongoDB can perform, growth investors will clearly jump aboard.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
More from InvestorPlace