monday.com drops as TD Cowen downgrades stock ahead of Q3 earnings

What happened

TD Cowen downgraded monday.com to Hold from Buy ahead of its third-quarter earnings, citing AI disruption to paid search and SEO, and slightly cut its price target to $105 from $110. Shares declined 5% during early Tuesday trading.

Confirmed

Global impact / market context

monday.com depends on paid search and search engine optimization, meaning how easily customers find it online, to reach smaller clients. If AI tools reduce that traffic, growth in its low-touch, self-service business slows, while it shifts staff toward larger $50k+ customers, which can raise sales costs.

Analyst inference

AI coding and packaged tools are letting small businesses build their own task-management solutions, which could pull demand away from work management vendors that are not core systems of record, meaning the main database a company runs on. That pressure appears strongest among smaller customers.

Analyst inference

What to watch

1. monday.com releases third-quarter results on Monday, Nov. 9. Analysts expect adjusted earnings per share of $1.37 on revenue of $369.18 million, against $1.16 and $316.86 million a year earlier. Confirmed
2. Watch whether management details its push of small and medium business engagements to partners and its shift of most go-to-market, meaning sales and marketing, headcount toward high-touch deals for $50,000+ customer opportunities. Proposed
3. Watch partner commentary on 14% third-quarter growth near the low end of plan and any fourth-quarter improvement signs, since weak momentum could pressure forward estimates and the low-touch business. Analyst inference

Evidence

• seekingalpha.com