Is it time to start buying MongoDB again?

MongoDB (MDB -2.91%) the stock has seen considerable volatility this year. The next-generation database company’s market value has nearly halved from its peak on Feb. 9 as slowing sales growth led investors to question its valuation.

However, that lower share price is giving investors reason to take another look at its value proposition, and the stock has recovered twice from recent lows. Should investors start buying shares of this SaaS stock again, or should they stay away?

MongoDB status

MongoDB provides an essential and long-awaited update to database technology: non-relational databases. Relational databases, such as those first popularized by Oracle decades ago, they contain rows and columns, storing specific types of data in each cell.

The MongoDB database, Atlas, specializes in storing data that does not fit into defined structures. Video files, tweets, and stock market tickers are examples of data types that need this non-relational approach, making the MongoDB database increasingly critical to managing today’s data needs.

Although its share price has fallen, customer growth continues. In its fiscal 2025 first quarter, which ended April 30, its customer base grew 14 percent year-over-year to 49,200, and the number of customers spending more than $100,000 with it grew 21 percent year-over-year.

So what went wrong?

At first glance, this kind of growth doesn’t appear to be something that should deter investors, especially since the financials seem to reflect the increases. In the fiscal first quarter, revenue rose 22% year over year to $451 million.

However, its net losses widened. In fiscal Q1, MongoDB lost $81 million, compared to $54 million in the same quarter in fiscal 2024. The higher losses were mainly because the $426 million it the company only spent them on operating expenses were slightly below its total revenue.

Its $121 million in stock-based compensation costs, a non-cash expense, also contributed to the financial pain. Even with $61 million in free cash flow, such costs may cause investors to question the company’s strategy of offering stock to retain employees.

Additionally, MongoDB’s previously high valuation has priced the stock for perfection. Its price-to-sales (P/S) ratio, now at 10, briefly topped 20 in February and was in the mid-teens before its most recent quarterly report. With that in mind, it was understandable that a less-than-perfect earnings report hurt the stock price.

MongoDB stock today

The question for investors now is whether they should buy MongoDB stock ahead of its next earnings report. The lower share price makes the case for buying look stronger.

Analysts’ consensus estimate is for fiscal 2Q25 revenue to rise 9% to $464 million. Of course, revenue was up 40% in the second quarter of fiscal 2024, so much of the optimism about MongoDB is gone.

However, the same analysts believe that revenue will grow 13% over the year, before rising 17% in fiscal 2026.

Moreover, the stock, priced around $250 per share at the time of writing, has rebounded from a 52-week low of around $213 per share. While its valuation isn’t cheap, its price-to-sales ratio is near multi-year lows, which could be a sign that MongoDB stock is forming a near-term low.

Should I Buy MongoDB Shares?

MongoDB stock is probably unsuitable for more conservative investors, but given the state of the business, the case for taking a speculative position in it looks increasingly strong. Today’s technology world needs ways to store non-relational data, and MongoDB can provide it.

Its revenue growth has slowed considerably, so it probably wasn’t wrong for investors to conclude that the higher valuations of the past were no longer justified. However, with MongoDB’s P/S ratio down to 10 and its top-line growth likely to accelerate again, this could be a good time for risk-tolerant investors to add to the stock.