GitLab's stock (NASDAQ: GTLB) is a notable extended hours mover, although one which will have the bears considerably happier than bulls. Down 12.6% in early pre-market trading, GTLB offered up earnings that caused markets to weigh strong results against conservative guidance
While the company reported adjusted earnings of $0.17 per share, exceeding analysts' estimates of $0.15, and revenue of $214.50 million, surpassing the anticipated $213.20 million, the market responded negatively to the company's forward-looking projections. GitLab projected earnings between $0.74 and $0.75 per share for fiscal year 2026, broadly in line with the consensus estimate of $0.73.
The revenue forecast of $936 million to $942 million fell short of the expected $941.70 million at the mid-point. This conservative guidance has sparked concerns about GitLab's growth trajectory and profitability.
As we covered in the lead up to Gitlab's earnings print the stock has been underperforming in recent times, with the shifting sentiment from a strong IPO now growing ever larger. Certain analysts had lowered targets leading into earnings, although with price targets that remain very healthy compared to current price action.
| Date | Analyst Sentiments |
|---|---|
| 06/06 | Scotiabank lowered the firm's price target on GitLab to $67 from $80 and keeps an Outperform rating on the shares |
| 06/06 | TD Cowen analyst Derrick Wood lowered the firm's price target on GitLab to $75 from $82 and keeps a Buy rating on the shares. |
The competitive landscape in the DevOps platform market is becoming increasingly crowded, with established players like Microsoft (GitHub) and Atlassian (Bitbucket) posing significant challenges. GitLab's ability to differentiate itself and maintain its market share in this competitive environment is far from guaranteed.
Furthermore, the broader macroeconomic environment remains uncertain, with potential risks such as rising interest rates and a slowing global economy that could negatively impact GitLab's growth prospects.
With the stock price down at $42.60 in overnight trading, a retest of previous support at $41.50 could be looming if bears have their way. $45 could provide some near-term resistance to any upside move. This is further evidence (if any were needed) that markets are forward looking, and earnings moves will usually be influenced more by guidance and outlook than actual results.
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