Monday.com (MNDY) Shares Soar 7.00% on Strong Q1 Earnings

Monday.com (MNDY) shares surged 7.00% intraday, marking the highest level since March 2025, with a two-day consecutive rise of 4.40%.

The strategy of buying Monday.com (MNDY) shares after they reached a recent high and holding for 1 week yielded moderate returns over the past 5 years, with a 9.77% gain. This suggests that the strategy captured some of the subsequent volatility and price movements, but the overall performance was relatively conservative. The 5-year Sharpe ratio was 1.56, indicating good risk-adjusted returns.

Performance Overview:

- The strategy’s 5-year return was 9.77%, with a Sharpe ratio of 1.56, indicating reasonable risk-adjusted returns.

- Monday.com’s stock reached its highest point on March 8, 2025, providing an entry point for the strategy.

Backtesting Details:

- Hold Period: The strategy involved holding the shares for 1 week after reaching the recent high.

- Rebalancing: The strategy likely rebalanced weekly, which aligns with the 1-week hold period.

- Benchmark: The performance was likely benchmarked against a risk-free rate or a broad market index.

Considerations:

- This strategy capitalized on Monday.com’s volatility, but its returns were not exceptionally high, making it more suitable for conservative investors seeking stability.

- The Sharpe ratio below 2 suggests the risk-adjusted return is acceptable but not exceptional, indicating there may be other strategies with higher risk-adjusted returns available.

Monday.com's stock price movement was driven by several factors related to its Q1 2025 financial performance. The company reported better-than-expected revenue, with sales increasing by 30% year over year to $282.3 million. Additionally, Monday.com achieved record GAAP and non-GAAP operating income, as well as record adjusted free cash flow. The company also reported quarterly earnings of $1.10 per share, beating the Zacks Consensus Estimate of $0.70 per share, representing an earnings surprise of 57.14%.

Several analysts have positively updated their ratings and price targets for Monday.com. Wells Fargo maintained its "Overweight" rating, while DA Davidson increased its price target for the company from $290.00 to $325.00. Goldman Sachs adjusted the price target to $350.00, and Needham reiterated its Buy rating with a price target of $400.00 USD. These updates reflect the analysts' confidence in the company's financial performance and future prospects.