Shares of Monday.com fell 21% after the company issued cautious guidance, underscoring how sensitive investors remain to growth signals in enterprise software.
Enterprise software stocks have rallied on the promise of AI-led efficiency. Monday.com’s latest forecast shows how quickly that optimism can fade.
Shares of Monday.com dropped about 21% after the company issued guidance that fell short of investor expectations. While revenue continues to grow, the outlook suggested slower momentum than markets had priced in.
The reaction was swift—and unforgiving.
Guidance matters more than results
The sell-off was driven less by past performance than by forward-looking signals. In today’s market, investors are willing to tolerate near-term margin pressure, but only if growth trajectories remain convincing.
Monday.com’s guidance suggested customers are becoming more cautious with spending, particularly around seat expansion and discretionary software purchases.
That trend has surfaced across the SaaS sector, but markets are reacting more sharply to companies perceived as premium growth plays.
SaaS valuation math has changed
For much of the past decade, high-growth software firms were rewarded for expanding aggressively, often at the expense of profitability. That equation has shifted.
Investors now expect a clearer balance between growth, efficiency, and predictability. Even modest deceleration can trigger outsized reactions when valuations remain elevated.
Monday.com’s stock move reflects that recalibration rather than a sudden loss of confidence in its product.
Competitive pressure is rising
Work management and collaboration software is a crowded space, with incumbents and startups alike layering AI features into similar workflows.
As differentiation narrows, customers are more selective, and pricing power becomes harder to sustain. That environment makes forward guidance especially important—and fragile.
A broader signal for software companies
The sharp drop serves as a warning across enterprise software: markets are no longer rewarding “good enough” growth.
Companies that cannot clearly articulate how AI, upselling, or expansion will reaccelerate demand may face continued volatility.
Monday.com remains a substantial business with loyal customers. But the market’s message is clear: confidence in the future matters more than comfort with the present.
