The Monday Blues. Is the Dip in Monday.com Stock a Buying Opportunity?
Key Points
It has certainly been a case of the Mondays for Monday.com (NASDAQ: MNDY) this year, as the stock is down more than 40% in 2026.
The work operating system company has been caught up in the software-as-a-service (SaaS) downturn, and investors sold the company off hard in February after it projected that its Q1 2026 revenue would come up just short of analyst expectations. It actually beat those original analyst revenue estimates by a wide margin ($342.9 million) when it reported its Q1 results in May, and it also raised its full-year guidance. This helped the stock rebound off its lows, but it is still down more that 70% in the past year.
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AI fears loom
Monday.com’s sell-off this year has largely been driven by fears that artificial intelligence (AI) would disrupt its business model. The company is largely a visual interface that helps customers automate workflow tasks. One of its advantages is that it’s a drag-and-drag tool that doesn’t require technical expertise to set up. And while the company has introduced AI tools, including AI agents and even a vibe (AI-assisted) coding tool, investors fear that similar tools will replace it.
The company’s growth remains strong, with its Q1 revenue climbing 24% to $351.3 million. Its growth was led by existing customers, with net dollar retention at 110%. Any number above 100% represents growth from clients who have been customers for at least a year after churn. Meanwhile, net dollar retention among larger clients was even more robust, at 114% for customers with more than 10 users and 116% for customers with annual recurring revenue (ARR) of $50,000 or more.
Looking ahead, the company forecast Q2 revenue of $338 million to $340 million, representing 18% to 19% growth. It projected full-year revenue of between $1.466 million and $1.474 million, above its prior guidance of $1.452 billion and $1.462 billion.
Image source: The Motley Fool.
Is the stock a buy?
Monday.com continues to deliver solid revenue growth, and its AI solutions, especially Monday Vibe, are performing well. Meanwhile, the sell-off has left the stock incredibly cheap. It now trades at a price-to-sales (P/S) ratio below 3 times and a forward price-to-earnings (P/E) ratio below 19 times, for a company still projected to grow revenue by nearly 20%.
An investment in Monday.com comes down to the core SaaS debate. Will organizations just build it themselves, or do they still value the updates, security, maintenance, and compliance that come with getting it from dedicated providers? Organizations have always been able to develop their own software, and AI makes it easier, but is the cost worth it? I have serious doubts, and as such, think the stock is a buy at these depressed levels.
Should you buy stock in Monday.com right now?
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Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Monday.com. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
