Investors eye activist intervention as MongoDB struggles with growth and valuation

Investing.com -- MongoDB (NASDAQ:MDB), once a high-flying software darling, is facing calls from investors for a shake-up, as shares remain down more than 50% from their 52-week high and full-year guidance reveals a sharp deceleration in growth. With pressure building, investors are increasingly hoping that a large activist investor will step in to force operational changes and potentially push the company to explore a sale of the business.

The database platform provider reported solid fiscal Q4 results, beating earnings and revenue expectations with EPS of $1.28 versus consensus estimates of $0.66 and revenue of $548.4 million against $520.5 million expected. However, the market’s focus quickly shifted to FY 2026 guidance, which disappointed on both the top and bottom line. Revenue is projected at $2.24 billion to $2.28 billion, below the $2.32 billion analysts had forecast, while full-year EPS is expected to come in between $2.44 and $2.62, well under the $3.39 consensus estimate.

The stock reaction has been stark. Despite MongoDB’s long record of innovation and substantial revenue growth since its 2017 IPO, the market is now digesting the reality that the company is transitioning from a high-growth narrative to a more mature, slower-growth business model. And with that transition, investors say, should come a reassessment of cost structure and strategy.

One area of particular focus is MongoDB’s operating expenses, which remain steep relative to its current cash flow profile. The company spent nearly $600 million on research and development in fiscal 2025, roughly four times the $150 million it generated in operating cash flow. General and administrative costs totaled an additional $220 million. Investors see an opportunity for significant margin improvement through more aggressive cost controls.

Randian Capital, an investor who has followed MongoDB since its early days as a public company, pointed to this misalignment between growth and expense as a key issue, in exclusive comments made to Investing.com. “MDB is spending almost $600mm per year on R&D, relative to a company that generated $150mm in cash from operations in 2025,” Randian wrote. The firm believes “the time is right for MDB to cut costs meaningfully across R&D and the $220mm in annual G&A costs.”

Beyond cost discipline, investors, such as Randian, believe MongoDB should consider strategic alternatives, including a possible sale. With a growing list of slowing software businesses becoming acquisition targets, some argue that MongoDB’s product and market position make it highly attractive to both strategic buyers and private equity. Large tech players such as Amazon (NASDAQ:AMZN), Oracle (NYSE:ORCL), IBM (NYSE:IBM), and SAP have been floated as potential suitors, and an LBO has also been seen as a viable option.

“MongoDB should explore a sale process,” Randian added, noting that “MDB presents a rare case of a business that has a large cost cut opportunity and clear visibility of many years of growth ahead.”

While MongoDB’s leadership under CEO Dev Ittycheria has garnered praise for guiding the company from a niche open-source project to a widely adopted enterprise platform, the business has entered a more mature phase. FY 2026 marks what may be the first year of consistent low double-digit revenue growth after years of 30%-plus expansion. For some investors, that inflection point makes the case for external involvement to reassess capital allocation and long-term positioning.

A properly executed turnaround, paired with a potential monetization event, could help rebuild investor confidence, many argue. MongoDB’s highly differentiated technology, particularly its appeal to developers working on flexible, scalable applications, remains valuable in a software market looking for durable platforms.

For now, no activist investor has taken a public stake, but the conditions —profitability potential, underperformance, and strategic interest —are increasingly aligned. With renewed scrutiny on costs and a growing call to evaluate all options, the company may soon be forced to respond to the pressures building from its investor base.

This article first appeared in Investing.com