Up in the Cloud: MongoDB and Cloudera Earnings Face-Off

Up in the Cloud: MongoDB and Cloudera Earnings Face-Off

We are going sky-high in the Earnings Edge today!

Two cloud-based companies report earnings this week: Cloudera Inc. (NYSE: CLDR) and MongoDB Inc. (Nasdaq: MDB).

I know there’s volatility in the overall market. Some momentum stocks like Cloudera and MongoDB got a haircut.

Both companies operate in big data and cloud-based platforms and went public in 2017.

Since then, one has been consistently climbing higher, while the other is finally turning things around over the last 12 months.

Market volatility dropped for both lately, but are either a buy?

Today, we’ll take a look at Cloudera and MongoDB to see what you can expect from their quarterly earnings report this week.

How These Cloud Stocks Could React After Earnings

Stock No. 1: Cloudera Inc. (NYSE: CLDR)

Earnings Announcement Date: Wednesday, March 10, after the close.

Expectations: Earnings at a $0.08 loss per share. Revenue at $221.43 billion.

Average Analyst Rating: Hold.

Cloudera, an enterprise cloud solutions company, recently announced it would release its data platform on Amazon Web Services and Microsoft Azure, allowing the company not to be free of ties to any one platform. More companies are taking this multi-cloud approach. And Cloudera is poised for growth because of it.

CLDR struggled after its 2017 IPO. The stock was as low as $5 a share in 2019 and 2020 before it jumped into the high teens. Today, the stock is 22% below its latest peak, and investors are wondering if it is safe to jump in. I’ve got to tell you if you don’t like volatility, this stock isn’t for you. Just take a look.

CLDR Is no Stranger to Wild Swings

CLDR earnings chart

Shares doubled from October 2020’s lows before the recent 20% drop. But the stock also doubled from March to June last year, up 150%, before it pulled back 30% to the October lows.

This stock sees wild swings constantly.

And just because it’s down 22% doesn’t mean it can’t fall another 20%. In fact, a 20% drop puts it at the green support line at the bottom of the chart above.

For me, I’d love to see it hold the red trend line, which was the previous resistance. That would be a clear breakout and retest moment for the key level of support. But if it fails to hold, shares would easily hit $12 and change in no time.

And the options market agrees with me — this is a volatile stock. It’s pricing in a 7.5% expected move on earnings this week. For any other company, that would be insanely high. But for Cloudera, it’s just a typical week for the stock.

Stock No. 2: MongoDB Inc. (Nasdaq: MDB)

Earnings Announcement Date: Tuesday, March 9, after the close.

Expectations: Earnings at a $1.22 loss per share. Revenue at $157.05 billion.

Average Analyst Rating: Outperform.

MongoDB operates a database platform worldwide. And the big news last week was that the company was doubling down on its cloud alliance with Google to deepen the ties for new Atlas integrations, MongoDB’s global cloud database.

The positive news was short-lived. Market volatility has wrecked the stock in recent weeks. Shares lost over $100, going from a peak of $429 a share to less than $329 a share — a 25% drop. Heading into earnings, now looks like a good time to add exposure to the stock. When we look at its price chart, there are two key trends I’m watching, and they both are not far below where the stock is currently trading.

A Positive Trend for MongoDB

MDB earnings chart

The green trend line goes back to last March. It was tested several times in 2020 and could be tested again in the next few weeks. But we also have the previous resistance level that now turns into support. That is also sitting just below where the stock fell on Thursday. As those two key trends converge, we are looking at an area of strong support to help buoy shares if there is a weak report this Tuesday.

The options market is looking for a 5% move on earnings. That’s not a lot for a stock moving this wildly from day to day. To the upside, a 5% move just retraces the drop from Thursday last week. A downward 5% move would hit the red support line on the chart.

I have a feeling MongoDB will see a bigger-than-expected move on earnings this week. And after the drop we’ve seen, I’d put my money on a rally.

But I’m not a betting man.

I play earnings after the event. I don’t get caught in the hype of a one-day move. Instead, I spot consistent trades after they announce earnings and jump in to capitalize on 5%, 10% or 20% moves higher over the next few days.

If you want to learn more about this strategy, click here.

Chad Shoop is a Chartered Market Technician and options expert for Banyan Hill Publishing. He is the editor of three leading newsletters: Quick Hit Profits, Automatic Profits Alert and Pure Income. His content is frequently published on Investopedia and Seeking Alpha. Check out his YouTube Channel to see his latest market insights.

Click here to join his free newsletter, Weekly Options Corner.

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