GitLab Earnings On Deck, (GTLB) Stock Underperforming Into The Print

GitLab's stock price (NASDAQ: GTLB) has fallen rather sharply over the past month, down 19.38% as the company prepares to release its next earnings report, after market close.

The street is expecting GitLab to report an EPS of $1.27, on revenue of $653.22million. Whilst this would reflect a 19.11% sales growth Y/Y, earnings is expected to have slowed on the $1.28 delivered this time last year, reflecting a squeeze.

The upcoming earnings release is particularly significant given the backdrop of acquisition speculation. In mid-October, rumors surfaced suggesting that Datadog (NASDAQ: DDOG) was considering a takeover bid for GitLab, potentially valuing the company at over $60 per share.

This news spurred a brief rally, with GitLab's shares gaining over 10%. However, skepticism from analysts, including a Wolfe Research report casting doubt on the deal's likelihood, led to a subsequent retreat. The market's reaction highlights the sensitivity of GitLab's stock to external factors and the inherent uncertainty surrounding potential mergers and acquisitions.

Currently, the stock price sits below both the 50-day ($46.19) and 200-day ($47.69) simple moving averages (SMAs), suggesting potential bearish momentum in the short to medium term. However, analysts maintain a generally positive outlook, with an average 12-month price target of $58.15, implying a potential upside of approximately 43.33% from the current price.

Nikko Asset Management Americas, Inc. added 888,900 shares of GitLab to their portfolio as of March 31, 2025, indicating a positive long-term outlook from institutional investors. This divergence in analyst opinions and institutional investment strategies underscores the mixed signals surrounding GitLab's future performance.

GitLab has made strides in product development, including the general availability of GitLab Duo with Amazon Q, integrating Amazon Q's software development agents into GitLab's DevSecOps platform. These advancements demonstrate the company's commitment to innovation and enhancing its product offerings, which could positively impact its competitive positioning and revenue growth.

Despite the recent developments, bears point to the fact that the company operates in a competitive landscape with established players, and integrating new technologies like Amazon Q may not provide the differentiating factor needed to justify a premium valuation. Furthermore, insider selling could be interpreted as a lack of confidence in the company's future prospects, irrespective of the stated reasons.