GTLB - GitLab Presents A Great Buying Opportunity Post Earnings Sell-Off (Rating Upgrade)

2024-03-17 04:59:13 ET

Summary

• GitLab's recent earnings report showed strong revenue growth, robust product innovation, and expanding margins.
• The company aims to grow its revenue by 25% YoY in FY25 and expects to achieve this through continued product innovation and growing monetization of GitLab Duo Pro.
• Macroeconomic uncertainties and competitive threats remain concerns, but the stock has an upside potential of 35% from its current levels, especially with growing enterprise spend on the platform.

Introduction & Investment Thesis

I initiated a Hold rating on GitLab ( GTLB ) on January 22, 2024. My Hold thesis was predicated on my belief that the company’s valuation looked fully priced in, despite growing revenue, especially among enterprise customers, and expanding margins. I had also highlighted that macroeconomic risks remained a concern with the possibility of sales cycle lengthening, which would hurt GitLab’s top line, as well as competition from bigger players, such as Microsoft (NASDAQ: MSFT ) that could further dampen GitLab’s growth prospects....

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