In his Homework segment of last Friday's "Mad Money" program, Jim Cramer followed up on a stock that stumped him during an earlier show. Cramer said software publisher Monday.com (MNDY) , a recent initial public offering, saw a remarkable run after entering the market last month but has since fallen out of favor.
The recent weakness is your chance to buy, however, as long as you're buying for speculation only, he noted.
Monday.com is a software-as-a-service platform that provides tools for developers to build and market their applications. Revenues are growing at 85%, but sales costs have sometimes exceeded those revenues. Cramer was also not a fan of Monday.com's sky-high valuation of 24x sales.
Another potential red flag is that the company only sold four million shares in its IPO even though it has 44 million shares outstanding. When the lockup period expires in December, Cramer expects more shares will hit the market at lower prices.
Keeping these fundamental high points in mind, let's check out two charts.
In this daily Japanese candlestick chart of MNDY, below, we only have a little bit of price history to glean any clues. We can see a large lower shadow on the first day of trading, telling us that traders rejected the lows below $170. We can also see a large upper shadow in early July as traders rejected prices above $240. Prices have weakened into the middle of July and the daily On-Balance-Volume (OBV) line is in a decline, telling us that sellers of MNDY have been more aggressive. We do not have enough price history to glean anything meaningful with the moving averages or with the Moving Average Convergence Divergence (MACD) oscillator.
In this daily Point and Figure chart of MNDY, below, we also lack price history but the software is projecting a potential downside price target of around $150.
Bottom line strategy: Unfortunately I do not find the charts and indicators of MNDY attractive. Avoid the long side.