Shares of enterprise software giants Snowflake (NYSE: SNOW), Datadog (NASDAQ: DDOG), and MongoDB (NASDAQ: MDB) were plunging on Monday, down by 8.7%, 6.4%, and 9.4%, respectively, as of 3:06 p.m. ET. There wasn't much company-specific news today, although Snowflake reported earnings last week, and MongoDB will report tomorrow. Friday's strong jobs and wages report, combined with today's stronger-than-expected services Purchasing Managers' Index (PMI) reading, showed the economy may be stronger than generally thought -- surprising, especially since recent financial results and guidance in the software industry have been less than stellar.
The recent bear market dampened a lot of the interest in hypergrowth stocks. Despite the stock price drops, some names continue to post phenomenal growth numbers, particularly stocks in the cloud sector. MercadoLibre is an easy hypergrowth stock for U.S. investors to overlook.
For the third quarter of fiscal 2023, which ended on Oct. 31, the cloud-based data warehousing company's revenue rose 67% year over year to $557 million and beat analysts' estimates by $18 million. On a GAAP (generally accepted accounting principles) basis, Snowflake's net loss widened year over year from $155 million to $201 million. Concerns about its decelerating growth and widening GAAP losses initially drove away the bulls, while rising interest rates and other macro headwinds exacerbated that painful sell-off.