GTLB - Is it too risky to buy GitLab stock as shares fall despite a solid FQ3 beat?

On Tuesday, GitLab Inc. ( NASDAQ:GTLB ) shares plummeted by more than 11% after reporting its most recent quarterly results. The company announced its fiscal third-quarter revenue and earnings Monday after markets closed, beating the consensus for analyst expectations.

GitLab posted FQ3 non-GAAP earnings per share of -$0.34, outperforming the average analyst estimate of -$0.48. On the other hand, its GAAP EPS of -$0.62 missed the expectation of -$0.54, while revenue for the quarter increased by 58.5% from the same quarter a year ago to $66.8 million, surpassing consensus Street expectations by $7.63 million.

Is it safe to buy GitLab shares?

From an investment perspective, GitLab shares trade at a steep price-sales ratio of 60.12, making the stock too expensive for bargain hunters.

In addition, analysts are less excited about its growth potential, forecasting an EPS decline of 47%. Therefore, growth investors could also opt for alternatives in the market.

The stock has plunged nearly 39% since its post-listing spike propelled it to an all-time high of $137 per share.

Technically, GitLab shares seem to be trading within a descending channel formation in the intraday chart. As a result, the stock has plummeted to trade closer to the oversold conditions of the 14-day RSI.

Therefore, investors could target short-term technical rebound profits at about $88.39, or higher at $98.45, while $70.83 and $60.57 are crucial support zones.

In summary, GitLab shares seem to have recently plummeted to create an exciting opportunity for technical buyers.

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