We came across a bullish thesis on MongoDB, Inc. (MDB) on Elliot’s Musings’ Substack by Elliot. In this article we will summarize the bulls’ thesis on MDB. MongoDB, Inc. (MDB) share was trading at $280.11 as of Sept 18th.

A database administrator managing a large database, ensuring the client's data is secure.

MongoDB (MDB) has carved out a unique position in the database market by offering a flexible, scalable NoSQL alternative to traditional relational databases. Its core product is a document-based database that has become a favorite among developers building modern, data-driven applications. As businesses increasingly adopt cloud-native and AI-driven infrastructures, MongoDB is well-positioned to capture a larger share of the $80 billion database market. Its document model allows for faster development cycles, making it especially popular with startups and companies building fast-moving, cloud-native applications.

Technically, MongoDB excels in several areas. It offers scalability through horizontal scaling, dynamic schemas that allow developers to work with evolving datasets, and the ability to handle unstructured or semi-structured data from sources like IoT devices or AI systems. Despite these strengths, challenges remain, such as the high cost of migrating from relational databases, the complexity of transactional workloads, and reluctance from large enterprises to make the switch without a significant value proposition.

MongoDB’s growth prospects are bolstered by increasing cloud adoption and the rise of AI-driven applications. Its fully-managed cloud platform, Atlas, simplifies database management across multiple providers, while its AI-friendly features—like vector search, real-time analytics, and serverless scaling—make it a strong choice for developers building AI-driven systems. However, competition from AI-specific databases, cloud hyperscalers, and open-source solutions remains a threat, especially in the AI space where resource-intensive workloads could stretch MongoDB's capabilities.

On the financial front, MongoDB’s valuation reflects its high growth potential but also presents risks. Sell-side consensus estimates project MongoDB's revenue to grow at a 22% CAGR, increasing from $1.6 billion in 2024 to just under $4.1 billion by 2028. Free cash flow (FCF) margins are expected to rise from 6% in 2024 to 16% by 2028. At an enterprise value (EV) of around $21 billion, MongoDB is trading at 10.5x EV/2024 sales. Revenue growth is projected to slow to 15% in 2024 before accelerating to 22% by 2026. This valuation leaves little room for error and requires near-perfect execution to justify further upside.