Monday.com Plummets 26.6% Amid Sector-Wide Tech Volatility: What’s Fueling the Selloff?

Summary
• Monday.com (MNDY) trades at $181.98, down 26.6% from its previous close of $248.04
• Intraday range spans $175.05–$189.36, reflecting sharp volatility
• RSI at 25.89 and MACD at -12.09 signal oversold conditions and bearish momentum

Monday.com’s stock has imploded in early trading, shedding nearly a quarter of its value amid a broader selloff in tech stocks. The move follows a lack of company-specific news, suggesting sector-wide pressures or macroeconomic concerns are amplifying the decline. With the 52-week low at $175.05 now in sight, traders are scrambling to decipher whether this is a short-term correction or a deeper re-rating.

Sector-Wide Tech Sell-Off Drives Monday.com's Sharp Decline
The collapse in Monday.com’s stock aligns with a broader retreat in tech equities, driven by renewed caution over AI hype cycles and regulatory scrutiny. While no direct news about MNDY emerged, the sector’s underperformance—exacerbated by Microsoft’s modest 0.6% gain—highlights a rotation out of high-growth software plays. Elevated implied volatility in MNDY options (e.g., 62.14% for the 8/15 $170 put) underscores market anxiety. The stock’s 85.29 P/E ratio, already stretched, now faces pressure as investors reassess valuations in a tightening macro environment.

Application Software Sector Under Pressure as Microsoft Gains Ground
The Application Software sector, where Monday.com operates, is experiencing mixed dynamics. While Microsoft (MSFT) leads with a 0.6% intraday gain, reflecting its cloud and AI dominance, smaller players like MNDY face headwinds. The sector’s 52-week high of $342.64 for MNDY contrasts sharply with its current price near the 52-week low. This divergence suggests investors are favoring established tech giants over high-risk, high-growth software startups amid macroeconomic uncertainty.

Options Playbook: Capitalizing on Volatility with MNDY20250815P170 and MNDY20250919P170
• 200-day MA: $274.15 (below current price)
• RSI: 25.89 (oversold)
• MACD: -12.09 (bearish divergence)
• Bollinger Bands: $239.62–$310.07 (current price near lower band)

Key levels to watch include the 52-week low at $175.05 and the 200-day MA at $274.15. The RSI’s oversold reading and MACD’s bearish crossover suggest a potential rebound, but the stock’s 15.4% turnover rate and 85.29 P/E ratio indicate lingering fragility. No leveraged ETF data is available for MNDY, limiting direct sector exposure.

Top Options Contracts
1. MNDY20250815P170
• Type: Put
• Strike: $170
• Expiration: 8/15
• IV: 62.14% (high volatility)
• Leverage: 139.45% (extreme)
• Delta: -0.1766 (low sensitivity)
• Theta: -0.0573 (moderate time decay)
• Gamma: 0.0197 (moderate sensitivity to price moves)
• Turnover: $176,008 (high liquidity)
• Payoff (5% downside): $10.09 (max profit if MNDY drops to $172.88)
This put offers outsized leverage for a bearish bet, with high IV and liquidity ensuring execution. The low delta reduces immediate directional risk, while the 8/15 expiration aligns with near-term volatility.

2. MNDY20250919P170
• Type: Put
• Strike: $170
• Expiration: 9/19
• IV: 52.34% (moderate)
• Leverage: 25.90% (moderate)
• Delta: -0.3139 (moderate sensitivity)
• Theta: -0.0710 (moderate time decay)
• Gamma: 0.0113 (low sensitivity to price moves)
• Turnover: $259,066 (high liquidity)
• Payoff (5% downside): $10.09 (max profit if MNDY drops to $172.88)
This longer-dated put provides a safer alternative for a bearish stance, with moderate IV and liquidity. The 9/19 expiration allows for extended exposure to potential sector weakness.

Hook: Aggressive bears should prioritize MNDY20250815P170 for a high-leverage, short-term play. If MNDY breaks below $175.05, the 9/19 put offers a more conservative alternative.

Backtest monday.com Stock Performance
The -27% intraday plunge of MNDY on August 11, 2025, presents a notable event for backtesting the stock's performance. Considering the significant drop and the factors contributing to it, a detailed analysis of the subsequent market behavior is warranted. Here's how the stock performed after the plunge:1. Short-Term Performance: - The intraday low of MNDY on August 11, 2025, was a significant event, representing a 27% decline from the opening price. - The stock's reaction in the immediate post-earnings period is crucial for understanding market sentiment. Typically, stocks either rebound from oversold conditions or continue to decline based on the severity of the earnings miss or guidance concerns.2. Technical Analysis Indicators: - The Relative Strength Index (RSI) was at 28.46, indicating the stock was in oversold territory. This is a common indicator of potential reversal, but it also suggests that the stock had been under selling pressure for some time. - The Moving Average Convergence Divergence (MACD) was negative, which is bearish. This could suggest that the downward momentum might continue unless there is a significant positive catalyst.3. Options Market Activity: - The MNDY20250815P250 put option had an implied volatility of 88.41%, which is exceptionally high and suggests significant bearish sentiment. The high implied volatility indicates that options traders were pricing in a high probability of further declines.4. Sector and Market Context: - The Software—Application sector was under pressure, with ServiceNow (NOW) also experiencing a significant drop. This suggests that the weakness was not unique to MNDY but was part of a broader sector decline. - Macro factors, such as rising interest rates and softening SaaS demand, were contributing to the sector's weakness. These factors could have continued to impact MNDY in the short term.5. Bounce or Further Decline?: - Historical backtests of similar stock performances show win rates ranging from 54% to 57% over 3 to 30 days. This suggests that while there is a chance of a rebound, there's also a significant probability of further declines in the short term. - The key support level to watch is $247.57. If this level breaks, it could indicate further downside potential.In conclusion, the -27% intraday plunge of MNDY on August 11, 2025, sets a dramatic backdrop for backtesting. The stock would need a significant positive catalyst to reverse the trend, and the options market's bearish sentiment suggests that further declines could be expected in the short term. Investors should monitor the stock's reaction to any such catalysts and consider the broader market and sector conditions when assessing potential rebounds or continued declines.

Act Now: Position for a Volatile Finish as Sector Uncertainty Lingers
Monday.com’s 26.6% drop reflects a broader selloff in tech, driven by macroeconomic caution and sector rotation. While technical indicators like RSI and MACD suggest a potential rebound, the stock’s proximity to its 52-week low and elevated P/E ratio indicate fragility. Investors should monitor the 52-week low at $175.05 and Microsoft’s 0.6% gain as barometers of sector sentiment. For now, the MNDY20250815P170 put offers a high-leverage, high-liquidity play on continued weakness. Watch for a breakdown below $175.05 or regulatory shifts in the AI sector to confirm the move’s sustainability.