Stock Groups

Is Gitlab a Buy Under $80? -Breaking

by Mike Robinson

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© Reuters. Gitlab is worth $80

GitLab (GTLB), which has a growing DevOps platform market, is benefiting and expects to see significant revenue growth during the current quarter. However, the company’s weak bottom line is a concern. It rose by 35% since its October Nasdaq debut. However, it is down 27.8% from when it was first listed and closes its trading session today at $75.00. Is GTLB now a profitable bet? Keep reading. GitLab Inc. is based in San Francisco and develops software that supports the development of software. On October 14th, the stock traded at $103.89 and its market capitalization jumped to $14.90 million. It was much higher than its anticipated range of $66-$69 per share, and an estimated valuation of around $11 billion. GTLB shares rose 35% their initial day of trading. But, it has dropped 41.7% and 14.8% in the last five days. The stock closed at $75.00 after its last trading session. The stock trades well below its 200-day and 50-day moving averages.

The company saw solid topline growth during its fiscal third quarter results but its bottom line was still grim. GTLB’s revenue came in at $66.80 million, up 58% year-over-year. But, the net loss grew 12.6% to $41.20million year-over-year. In the current quarter, revenue is projected to range from $69.50 to $70.50 millions. However, its loss per share will be between $0.26 and $0.25. “We are pleased with our dollar-based net retention of over 130% and the positive business outcomes we continue to drive for our customers across all verticals around the world. The market for DevOps platforms is underpenetrated, and as a pioneer of The DevOps Platform, GitLab is well-positioned to make the most of the substantial market opportunity before us,” according to GitLab CEO, Brian Robins.

However, following its third-quarter earnings release, Piper Sandler analyst Rob Owens lowered GTLB’s price target to $100 from $120 while maintaining a Hold rating. Also, Cowen & Co. analyst Derrick Wood reduced the price target to $130 from $145. Furthermore, the company’s current valuation does not justify its underlying fundamentals, putting its valuation metrics at astronomical levels. High volatility is indicated by the beta score of 1.61

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