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Investing.com -- Bank of America downgraded Monday.com to Neutral from Buy, citing mounting risks from Google’s integration of AI Overviews into search results that are eroding the company’s web traffic and threatening its self-serve business model.
The bank said search engine optimization (SEO)-driven visits to Monday.com’s website fell an average 23.5% year-on-year in the June quarter, with declines accelerating to 25.3% in July, according to Similarweb (NYSE:SMWB) data.
With less than 30% of signups coming through Google (NASDAQ:GOOGL), BofA introduced a proprietary framework using Similarweb trends to assess the impact, concluding that growth could come under pressure even after the stock’s 30% drop since its second-quarter results.
The brokerage cut its price objective to $205 from $240 and trimmed 2026 revenue estimates, saying recent declines point to a “material reversal” in self-serve growth.
BofA estimates gross added self-serve annual recurring revenue, which grew 29% in 2024, contracted 7% in the second quarter and could decline more than 5% in 2026 if current traffic trends persist.
BofA warned that the shifting search landscape creates a difficult backdrop for Monday.com’s Sept. 17 analyst day, where investors expect long-term growth targets.
It said the likelihood of a bullish financial framework being introduced has diminished.
The note added that declining SEO-driven traffic is raising customer acquisition costs. SEO has been a low-cost source of new signups, but Similarweb data showed it contributed 10 percentage points less to indirect traffic in July compared with a year earlier, while Monday.com’s pay-per-click spending rose 46% from second-quarter levels.