Why is Monday.com Down? AI Disruption Fears and Weak Guidance Drive Selloff

Monday.com (MNDY) is trading at valuation levels that few software investors would have thought possible just a year ago. Down an astonishing 82.5% from its all-time high of $450.00 set in November 2021, the stock recently crashed to a new all-time low of $68.68 in February 2026. Drops of this magnitude in former high-growth tech darlings are relatively rare, and when a software stock sheds over three-quarters of its value, it signals a fundamental shift in how the market views the company's future.

Now hovering around the $78 mark, investors and analysts alike are asking why Monday.com is dropping so heavily, and what needs to happen to stabilize the bleeding. To understand the current price action, we must look at the structural market fears and recent financial updates driving this massive repricing.

Why is Monday.com Dropping? The Fundamental Shift

The bulk of the recent downside momentum was triggered by the company's fiscal 2025 fourth-quarter earnings report on February 9, 2026. On the surface, the backward-looking numbers were quite strong. Monday.com reported an adjusted earnings per share of $1.04, beating Wall Street estimates of $0.92, while quarterly revenue jumped 25% year-over-year to $333.9 million. However, the stock market is a forward-looking discounting mechanism, and the company's outlook for the future spooked investors, sending the stock tumbling over 21% in a single trading session.

There are three primary reasons why Monday.com is down so aggressively:

• Decelerating Growth Expectations: Management issued a cautious 2026 financial outlook, projecting full-year revenue between $1.452 billion and $1.462 billion. This fell noticeably short of the $1.48 billion consensus. More importantly, it signals a slowdown in revenue growth from 27% in 2025 to approximately 18-19% in 2026, stripping Monday.com of its premium hyper-growth valuation.
• The AI Disruption Narrative: The overarching cloud hanging over the entire Software-as-a-Service (SaaS) sector is the rapid evolution of artificial intelligence. With the release of advanced autonomous agents like Anthropic's Claude Opus 4.6 and OpenAI's "Frontier" platform in early 2026, the market is aggressively repricing application-layer software. Investors fear that bespoke, AI-generated tools and "vibecoding" platforms could render Monday.com's traditional, seat-based project management licensing model obsolete.
• Small Business Weakness and Margin Pressures: During the earnings call, management noted ongoing choppiness in their small-to-medium business segment, specifically citing struggles in their "no-touch" self-serve customer acquisition channel. Furthermore, with 55% of its workforce based in Israel, a recent 20% appreciation of the Israeli shekel against the U.S. dollar is creating significant foreign exchange headwinds, which management expects will drag down 2026 operating margins by 100 to 200 basis points.

Monday.com Valuation: A Historic Contraction

As the stock has cratered, Monday.com's valuation multiples have compressed drastically. During its peak growth phase over the last few years, the stock routinely traded at a Price-to-Earnings (P/E) multiple north of 200x, reflecting boundless optimism about its total addressable market. Today, with a market capitalization of roughly $4.07 billion, the P/E ratio has plummeted to just 35.2x.

While a 35x multiple is not inherently "cheap" for a traditional value stock, it is remarkably low for a software company that is still growing its top line at nearly 20% and generating positive free cash flow. Compared to sector peers like Asana and Smartsheet—many of which still struggle to consistently post GAAP profitability—Monday.com's combination of actual earnings and a compressed 35.2x multiple makes it an anomaly in the project management space. This sharp multiple contraction is a direct result of the market pricing in the aforementioned AI risks and shifting Monday.com from a "growth at all costs" bucket into a more mature software bucket. This dramatic repricing is starting to attract value-oriented attention, but the stock remains a "show me" story for large institutional capital.

Technical Outlook: Navigating the Extreme Selloff

From a technical perspective, the damage to the Monday.com chart is severe. The stock is currently trading 85% below its 30-day average volume, with recent daily volume resting at just 525,697 shares. This lack of broad participation suggests that institutions are largely standing aside, waiting for the dust to settle following the post-earnings plunge.

Momentum oscillators highlight the sheer exhaustion of the current downward trend. The daily RSI is currently registering a 39.4, but the longer-term weekly RSI sits deep in oversold territory at 26.8. Additionally, proprietary extreme deviation metrics underscore the severity of the drop, with a Daily XTRM Score of -129.83 and a Weekly XTRM Score of -253.56.

The defining technical feature right now is the key support level at $69.30, which sits just above the all-time low of $68.68 established on February 11, 2026. After breaking down from the mid-January pivot high of $123.45, the stock has attempted to base around the $68-$70 zone, forming a subsequent higher pivot low at $68.93 on February 23.

What to Watch Next

For investors tracking Monday.com (MNDY), the $69.30 support level is the line in the sand. A healthy test of this support would look like a period of prolonged sideways consolidation on decreasing volatility, allowing the longer-term moving averages to catch up to the price action. This type of basing formation would indicate that the relentless selling pressure has finally been absorbed.

Conversely, a sustained weekly close below the $68.68 all-time low would push the asset into uncharted territory and imply further price discovery to the downside. If that floor gives way, it suggests the market is aggressively accelerating its timeline for AI disruption.

While a drop of 82.5% from all-time highs certainly puts the stock in a statistically rare, oversold category, the structural headwinds facing the software industry cannot be ignored. The stock is approaching an interesting area for those evaluating long-term software multiples, but given the rapidly shifting technological landscape, the price action remains something to monitor closely rather than blindly trust.