Why Monday.com Stock Lost 37% in February

Software stocks got pounded last month as the narrative that AI would disrupt enterprise software-as-a-service (SaaS) products took hold.

Anthropic introduced new plug-ins for Claude Code and Claude Cowork, showing that AI products could be closer to challenging traditional software products than investors thought.

Monday.com (NASDAQ: MNDY) was one of the biggest losers in the month as the customer relationship management (CRM) software company is seen as vulnerable to AI pressure, and it disappointed investors with its fourth-quarter earnings report.

According to data from S&P Global Market Intelligence, the stock fell 36.7% in the month. As you can see from the chart below, the sell-off came in the first week of the month as the software sell-off continued and as its earnings report disappointed.

MNDY data by YCharts

What happened to Monday.com

Monday.com was sliding in the first week of the month, along with the rest of the SaaS sector, as negative sentiment that began late in January and picked up steam in February.

When it reported fourth-quarter earnings on Monday.com, the SaaS company seemed to confirm those fears, even though it beat headline estimates in the report.

Revenue rose 25% to $333.9 million, ahead of the consensus at $329.7 million, and the company said that Monday Vibe, its vibecoding app builder, was the fastest product to reach $1 million in annual recurring revenue (ARR) in its history. However, that may explain why investors are fearful of AI disruption, as those are the kinds of AI tools that investors believe can compete with Monday.

Monday eked out a generally accepted accounting principles (GAAP) operating profit, and it reported an adjusted earnings per share of $1.04, which was down from $1.08 but beat the consensus of $0.92.

Despite those results, investors were still spooked by the company's guidance and signs that growth in smaller customers was slowing, a sign that AI could be starting to challenge it.

Image source: Getty Images.

Where Monday.com goes in 2026

Looking ahead to 2026, the company expects revenue growth of 18%-19% to $1.452 billion-$1.462 billion, below estimates at $1.48 billion. First-quarter revenue guidance of $338 million-$340 million was also below the consensus.

Monday has fallen sharply over the last six months on signs of weakening growth, and it seems like shaking the AI threat will be difficult, at least without a reacceleration in revenue growth.

Its valuation has come down substantially, but investors may need to see meaningful growth in GAAP profits for the stock to recover.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Monday.com. The Motley Fool has a disclosure policy.