Monday.com Downgraded by Bank of America Amid SEO Challenges

Bank of America downgrades Monday.com (MNDY) to "Neutral" due to SEO challenges and AI integration risks. Analysts project an average target price of $280.92, indicating a 62.03% upside potential from the current price. The GF Value suggests a potential 108.88% increase from the current price.

Bank of America (BofA) has downgraded Monday.com (NASDAQ: MNDY) to "Neutral" from "Buy," citing increasing risks. The project-management software company's shares fell nearly 2% in premarket trading following the downgrade [1]. The decision was based on an in-depth review of Monday.com's web traffic by marketing channel, which revealed significant declines in website visits, particularly from Google search engine optimization (SEO) driven traffic [1].

According to Bank of America analyst Matt Bullock, SEO-driven website visits to Monday.com sank by an average of 23.5% year-over-year (Y/Y) in the second quarter of 2025, accelerating to -25.3% in July [1]. Bullock attributed these declines to Google's expanding integration of AI overviews into search results, which could potentially disrupt Monday.com's customer acquisition channels. Despite the downgrade, Bullock maintained a price target of $205, suggesting that the risk/reward balance is still favorable [1].

Bullock also highlighted potential "material self-serve" pressures for Monday.com in the second half of 2025 and 2026 if the weak July 2025 traffic trends continue [1]. He estimated that self-serve gross added annual recurring revenue (ARR) could decline by 5.2% Y/Y in 2026, equating to a roughly 2% hit to total 2026 gross ARR added [1].

The downgrade comes amidst Monday.com's strong second-quarter performance, which saw robust revenue growth and non-GAAP profitability that exceeded Wall Street expectations [2]. However, the market responded negatively to concerns around operating margin compression and uncertainty in customer acquisition channels [2]. Despite these challenges, management remains optimistic about the company's ability to monetize its new AI-driven features and expand enterprise customer adoption [2].

In conclusion, the Bank of America downgrade of Monday.com reflects growing concerns about the company's customer acquisition channels and potential self-serve pressures. While the stock performance may be impacted, the company's strong second-quarter results and management's optimistic outlook suggest that there may still be opportunities for growth.

References:
[1] https://seekingalpha.com/news/4487871-monday-com-slides-as-bofa-downgrades-amid-increasing-risks
[2] https://finance.yahoo.com/news/5-insightful-analyst-questions-monday-053131017.html