New Trade for April 1st, 2021

Wall Street seemed optimistic this morning as stocks nudged higher.  Technology stocks seem to be looking for a continuation of yesterday’s action.  In the previous session Tech was the strongest sector — The S&P 500 Technology Sector SPDR (XLK) closed at its highest price since March 17th.  

The tech pullback has dragged tech names down significantly.  For some of these battered stocks it seems that the baby may have gotten thrown out with the bath water, which has created some undeniable opportunities.  Many investors are looking for tech stocks at bargain prices now.  If that sounds like you then you’ll want to read on to find out about one tech stock that has been dragged down despite an earnings beat, analyst upgrades and a drastically expanding customer base.

Cloud database provider MongoDB’s (MDB) stock has been caught up in the tech pullback and is down around 37% from its February high.  Even a solid earnings report and an analyst upgrade didn’t prevent the stock’s downward slide.  For long-term-minded investors, this presents an opportunity to buy MDB at a discount.

In February, Google Cloud and MDB entered an expanded five-year partnership to offer deeper integration of Google Cloud products with MDB‘s global cloud database, MongoDB Atlas. The partnership is driving greater customer engagement and enhancing MDB’s customer experience because it offers a “pay as you go” service on the Google Cloud Marketplace. MDB also recently teamed up with Tencent Cloud to allow its customers to adopt and use MongoDB-as-a-Service across Tencent’s global cloud infrastructure.

In March, management reported its Q4 results with $171 million in top-line revenue growing at a 38% year-over-year clip. MDB’s Atlas is continuing to be the workhorse in its stable with a 66% year-over-year revenue gain to become almost half of the company’s overall business.  Even more impressive is that Atlas customer count grew a whopping 51% over the previous Q4 and it’s up sequentially 10% from last quarter.

Atlas customers tend to be smaller with an average of $6,000 to $7,000 in annual spend.  Often, these are developers testing out the features and functionality with a non-mission-critical application before choosing the product to power an enterprise-wide application. This has been a successful land-and-expand model for the company.  With consistent net expansion rates of 120%-plus, investors can see why customers who spend over $100,000 annually have grown to 975, up 30% over the last year.

As companies move their information technology applications to the cloud, this developer-loved platform could be the leading choice to power enterprises of tomorrow.  In addition, new cloud applications are being developed every day, giving this cloud database plenty of room to run.  It seems the long-term thesis for this tech stock is still intact and the only thing that’s changed for investors is the price of the stock.  You may want to gobble up a few shares at this price to expand to your existing position or add this cloud player to your portfolio.

Where to invest $1,000 right now...

Before you consider buying MongoDB, you'll want to see this.

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And it's not MongoDB.

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But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.

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