Shares of MongoDB (MDB) are sliding after Amazon Web Services (AMZN) unveiled its DocumentDB with MongoDB compatibility. Commenting on the news, Stifel analyst Brad Reback said he was “not surprised” and does not expect the AWS product to have a meaningful impact on MongoDB’s near-term business, though he said the news would pressure the stock. While acknowledging that the development is a “negative” for MongoDB as it adds to competitive pressures, his peer at Oppenheimer also argued that the development validates the company’s growing popularity and market opportunity.
AWS UNVEILS DOCUMENTDB: On Wednesday, AWS announced Amazon DocumentDB with MongoDB compatibility, “a fully managed document database service that supports MongoDB workloads.” According to the company, “developers can use the same MongoDB application code, drivers, and tools as they do today to run, manage, and scale workloads on Amazon DocumentDB and enjoy improved performance, scalability, and availability without having to worry about managing the underlying infrastructure. Customers can easily migrate their on-premises or Amazon Elastic Compute Cloud MongoDB databases to Amazon DocumentDB with virtually no downtime using the AWS Database Migration Service. There are no up-front investments required to use Amazon DocumentDB, and customers only pay for the capacity they use.”
NO NEAR-TERM IMPACT: In a research note to investors, Stifel analyst Brad Reback said he was not surprised by AWS’ DocumentDB announcement given MongoDB's "tremendous developer popularity." While the analyst expected MongoDB shares to be under pressure given the news, Reback does not expect the AWS product to have a meaningful impact on MongoDB's near-term business as he believes customers value MongoDB’s deployment optionality and lack of lock-in. He also noted that emulated API solutions are not able to access core MongoDB functionality within the database, and said Atlas already offers many of same features that AWS is touting with its offering. Further, because of MongoDB’s deep technical focus, the analyst argued that the company should maintain its lead over the cloud vendors. Reback reiterated a Buy rating and $95 price target on MongoDB shares.
COMPETITIVE OVERLAP: Also commenting on AWS' new offering, KeyBanc analyst Brent Bracelin told investors that the DocumentDB unveiling increases the competitive overlap with Amazon, but also validates the need for MongoDB's patented document-oriented database. The analyst added that he remains bullish on the prospects for MongoDB to sustain high growth based on a large $63B addressable market that can support multiple players, differentiated functionality in MongoDB version 4.0 versus Amazon DocumentDB emulating version 3.6, and proprietary data analysis that suggests customers increasingly desire multi-cloud functionality. Based on his analysis, there was accelerating growth of MongoDB servers running on Google Cloud (GOOG; GOOGL) and Microsoft’s (MSFT) Azure over the last three months. Voicing a similar opinion, Oppenheimer analyst Ittai Kidron also argued that while the development is negative for MongoDB and adds to competitive pressures, there are some positives as it validates the latter’s growing popularity and market opportunity and it is likely to offer MongoDB a permanent feature advantage. Further, Kidron believes that MongoDB still maintains its cloud-independent value proposition. He reiterated an Outperform rating and $90 price target on MongoDB's shares.
PRICE ACTION: In morning trading, shares of MongoDB have plunged 7% to $79.78.