MongoDB (MDB) Sinks on Primary Share Offering, Seen as a War Chest Building for Strategic Investment and Execution

Shares of MongoDB (NASDAQ: MDB) are down about 6% in pre-open Wednesday after the company announced it priced an upsized offering 2.5 million shares of its Class A common stock at a price to the public of $365.00 per share. Originally, the company was looking to offer 2.3 million shares.

After underwriting discounts and commissions, the company is hoping to raise $889.0 million from the offering. The offering is conducted by Morgan Stanley and Goldman Sachs as joint book-running managers.

Macquarie analyst Frederick Havemeyer has weighed in to note that MDB is likely “building a war chest for strategic investment & execution in its highly competitive market as shares re-approach highs.”

“With shares re-approaching highs following the co.’s strong FQ1’22 results, which showed a further re-acceleration in MongoDB Atlas, we see rationale in issuing equity. The co.’s prospectus indicates that proceeds from the offering are for general corporate purposes, which includes working capital, CapEx, M&A, strategic investments, refinancing or repayments of debt, and share repurchases,” the analyst commented in a note.

“Given MongoDB’s M&A history, we also view it as more likely that the co. could make chunky strategic technology acquisitions to bolster its platform vs. transformative M&A.”

Havemeyer rates the stock a “Outperform” with a $400.00 per share target price.

Two days ago, it was disclosed that the company’s COO and CFO Michael Lawrence sold 7,302 shares at an average price of $391.63 a share to raise $2.9 million.

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