Monday.com Investigated Over Disclosures
Law firm Levi & Korsinsky, LLP has launched an investigation into monday.com Ltd. (NASDAQ: MNDY). The probe centers on whether the company's forward-looking financial statements were made without properly disclosing known headwinds. The specific issues cited include "no-touch channel weakness and AI investment costs."
- The investigation followed monday.com's February 9, 2026, earnings call, where it revealed that its 2026 guidance accounted for ongoing weakness in its "no-touch" channel for small and medium businesses and a 100-200 basis point drag from foreign exchange rates. Following these disclosures, the company's stock fell by 13-14%. - Issues with the "no-touch" self-service channel are a recurring theme; in the second quarter of fiscal year 2025, the stock dropped 26% after management cited softness in web traffic, and it fell another 19% in the third quarter due to a similar guidance miss. The key question in the investigation is when management recognized this weakness as a persistent headwind rather than a temporary issue. - In addition to the channel weakness, monday.com's full-year 2026 revenue forecast of $1.452 billion to $1.462 billion and its Q1 2026 forecast of $338 million to $340 million both fell short of analyst expectations. The company also withdrew its long-term financial targets for 2027, citing the volatile macroeconomic environment and the evolving AI landscape. - Increased spending on AI products, including Monday Vibe, Monday Sidekick, and Monday Agents, was cited as a contributing factor to lower gross margin guidance. The company projects gross margins to decline from 90% to the mid-to-high 80s in fiscal year 2026, partly due to AI infrastructure costs. - Despite the headwinds, the company's new AI tool, "Monday Vibe," became the fastest product in the company's history to surpass $1 million in annual recurring revenue. However, this represents a small fraction of the company's overall revenue base. - The company's co-CEO, Eran Zinman, has stated that they are not currently seeing a competitive impact from any AI companies and are shifting their product to be more AI-native. However, some analysts have expressed concern that new AI tools could potentially replace traditional software like monday.com's platform. - In response to the earnings call and subsequent stock drop, several analyst firms, including Piper Sandler, Needham & Company LLC, and UBS Group, lowered their price targets for monday.com's stock.
