GTLB - GitLab: Too Much Competition Little Differentiation And Elevated Valuation; Sell For A Better Entry Point

• GitLab is another open-source technology to hit the market recently. Open-source companies have had mixed success. MongoDB/Elastic/Red Hat are very successful while Cloudera/JFrog are less successful.
• GitLab competes in a heavily contested SCM and application development tools market. Large incumbents such as Microsoft, Atlassian, IBM, and GIT own significant chunks of the market.
• GitLab has shown some initial success in the market with low-hanging fruit, but we believe the large incumbents will make gaining share at their expense challenging.
• GitLab remains expensive and is trading at 12x NTM or 13.2x EV/C2022 sales versus a historical average of 5x-10x EV/NTM for high-growth stocks.
• GitLab shares can easily decline to $20-25 levels over the next few months. Hence, investors should sell shares here and wait for a better entry point.

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