Software stock Monday.com plunges 19% amid growing concerns over AI disruption
Key Points
- Monday.com released weak performance guidance, as it is facing increasing competitive pressure from agent AI tools.
- Software stocks have plummeted in recent weeks as the market fears new AI tools may disrupt their business models.
- Co-CEO and co-founder Eran Zinman stated that the company has not yet been impacted by AI enterprises, but has adjusted its marketing and advertising strategies to focus on AI.
The Israel-based project management platform's share price plunged more than 19% on Monday after the company released weak performance guidance, further fueling concerns that artificial intelligence is disrupting the software industry's business model.
Monday.com expects revenue for this quarter to be between $338 million and $340 million, below the $343 million forecast by analysts surveyed by FactSet. Full-year revenue is expected to be $1.452 billion to $1.462 billion, also missing the market expectation of $1.48 billion.
In recent weeks, software stocks have been sold off due to rising concerns about AI-driven disruption and fears that new agent tools might replace existing software.
Since the start of this year, the iShares Expanded Tech-Software Sector ETF (IGV) has fallen 22%, and Monday.com's share price has halved.
On the analyst earnings call, management defended the company's market position and emphasized that they are launching new AI features, including agent and sentiment detection capabilities, to boost conversion and user engagement.
"We currently haven't seen any impact from AI companies, but regardless, we are moving our product in a more native AI direction," said co-CEO and co-founder Eran Zinman.
He said the company has adjusted its ad copy and homepage content to focus more on AI.
However, management stated that due to short-term margin pressures from exchange rate fluctuations, the market is expected to remain volatile this year.
The software company reported non-GAAP earnings per share of $1.04 for the fourth quarter, above the London Stock Exchange Group (LSEG) estimate of $0.92. Revenue increased 25% year-over-year to $333.9 million, surpassing analysts' expectations of $329.6 million.
Monday.com expects full-year operating profit to be between $165 million and $175 million, below FactSet's forecast of $220.2 million.
Editor: Guo Mingyu
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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