Monday.com hit with downgrades after dour outlook

Investing.com -- Shares of Monday.com are down 0.83% in Tuesday premarket trading, after the stock settled more than 21% lower on Monday.

The project management software maker issued weaker-than-expected 2026 guidance, scrapped its 2027 targets and warned of slower growth, raising concerns about execution risks and the longer-term impact of AI on demand.

The company reported fourth-quarter earnings of $1.04 per share, beating estimates of $0.92. Revenue rose 25% from a year earlier to $334 million, ahead of the $330 million consensus.

But its outlook disappointed investors. Monday.com projected current-quarter revenue of $338 million to $340 million, below analysts’ expectation of $343 million. For 2026, it forecast revenue of $1.452 billion to $1.462 billion, missing the $1.48 billion consensus estimate.

Baird downgraded the stock to neutral, citing the lower 2026 outlook, a reset in margins and the withdrawal of 2027 targets as negative surprises.

The firm said demand continues to be weighed down by paid search marketing and internal changes to areas such as marketing, product and go-to-market strategy, which could add execution risk. It expects sentiment to stay cautious as the company resets expectations.

Loop Capital also downgraded the shares to hold, saying the quarter was solid but not strong for a typically robust period. The firm pointed to moderating momentum with larger customers and slower adoption of newer products, both key to the company’s growth plans. It added that margins are set to decline in 2026 as the company increases investment.

Loop said growth is now expected to slow into the mid- to upper-teens, with few near-term catalysts to lift the stock. The firm also flagged a broader concern that spending on AI agents and automation could divert budgets away from traditional software tools, limiting expansion and pricing power for legacy platforms.

While the stock now trades at lower valuation levels, analysts said the weak guidance and uncertainty over long-term earnings could keep pressure on shares until growth reaccelerates and AI-driven revenue becomes clearer.

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