Shares of MongoDB (MDB) are under pressure after Nomura Instinet analyst Christopher Eberle said he recently discovered that Lyft (LYFT) is "quite dissatisfied" with the company's performance and believes the ride-sharing service operator is in the process of a "massive database migration." While the analyst has not yet identified who Lyft is migrating to, Eberle thinks it could be either Amazon Web Services' (AMZN) DynamoDB or Google (GOOGL) Spanner.
LYFT 'QUITE DISSATISFIED': In a research note to investors, Nomura Instinet's Eberle said he recently discovered that Lyft is "quite dissatisfied" with MongoDB's performance and believes the ride-sharing service operator is in the process of a "massive database migration," highlighting pain points such as connection handling, back pressure, managing fall over, observability, and query planning. Eberle has yet to identify who Lyft is migrating to, but he thinks it could be either AWS DynamoDB or Google Spanner, based on industry conversations.
INCREASED COMPETITION, SSPL INTRODUCTION: Eberle also said he continues to believe there is a "significant disconnect" between risks associated with the introduction of SSPL and increased availability of viable competitive solutions at a point in time when MongoDB may be most vulnerable. The analyst pointed out that Google has released Cloud Firestore, a flexible, scalable NoSQL Document database used for mobile, web, and server development from Firebase and Google Cloud Platform, noting that he expects Firestore to excel in areas such as querying, write performance, multi-region auto-scalability, and automatic repeat of transactions. Furthermore, Eberle highlighted that RHEL and Fedora dropped support for MongoDB, Red Hat (RHT) dropped MongoDB out of Satellite in favor of PostgreSQL, and GNU announced its plans to move its GNU Health Federation message and authentication server from MongoDB to PostgreSQL. While the analyst is not "suggesting that PostgreSQL is the holy grail or even the next best alternative to MongoDB," he does believe that this supports the idea that the new database world will remain highly fragmented, as different applications will require different databases and validates the AWS strategy of having multiple solutions for a wide variety of customers. While a number of investors continue to focus on AWS DocumentDB and its lack of competitive functionality, the analyst argued that this has not been a main tenant of his cautious view on the stock, although it does add fuel to the fire. Eberle reiterated a Reduce rating and a $63 price target on MongoDB shares.
PRICE ACTION: In morning trading, shares of MongoDB have dropped about 2% to $105.94.
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