Beware Insider Selling At Gitlab 

Beware Insider Selling At Gitlab 

Gitlab A Risky Stock For Investors To Hold 

To be honest, there has been very little insider activity in shares of Gitlab (NASDAQ: GTLB) but there is a reason. The stock has only recently IPOd and there are lockup periods to be considered. That said, Insidertrades.com reveals there is one notable purchase we want to point out but even it isn’t all that big of a deal. Crossover Management Technology, listed as an insider, purchased 325,000 shares of the stock. That’s not a large amount, worth about 0.225% of the shares, but there is something else investors need to be aware of. 

Gitlab is a very, very low float stock. The company’s shares available to the market are less than 7% of all shares in existence. That means there are a lot of shares in lockup and/or in the company’s treasury just waiting for the right time to be sold. What this means for investors is a mighty headwind for share prices no matter the company’s performance. 

Gitlab Has Robust Quarter, Shares Fall 

Gitlab had a very strong quarter in which revenue grew nearly 59% from the previous year. The revenue also beat the consensus by almost 1300 basis as well, showing just how strong the results are. Strength was driven by businesses of all sizes and internal data reveals that once a customer begins using the platform they eventually expand their services. 

In terms of business, customers contributing more than $5K in TTM revenue are up 66% from last year while those contributing more than $100K in revenue are up 73%. In terms of recurring revenue and retention, the company is operating with a very healthy 130% net retention rate. The company also listed some of its newest clients which include Lockheed Martin and Suzuki Motors. 


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Moving down the report, the company was able to maintain its GAAP gross margin on a YOY basis at 89%. The adjusted margin, however, expanded 100 basis points to 90% to help drive cash and free cash flow. As for earnings, the company posted a GAAP loss of $0.62 which fell short of the Marketbeat.com consensus by $0.08 while the adjusted loss of $0.34 beat by $0.14. 

The guidance for the current quarter is equally good but still failed to hold share prices up. The company is expecting full-year revenue in a range of $244 million to $245 million versus the $233 expected by the analyst and the EPS is the same. The company is expecting an adjusted loss in the range of $1.43 to $1.42 versus the consensus of $1.52 and there is an upside risk in the figures. 

The Analysts Are Bullish On Gitlab, Targets Fall 

The analysts are bullish on Gitlab but the consensus price target is on the way down. The current consensus is near $129 and assumes about 58% of upside for the stock but the most recent chatter is a bit weaker. Four analysts lowered their price target in the wake of the Q3 report and their consensus is closer to $115, still good but down nonetheless. 

The Technical Outlook: Gitlab Is Moving Lower 

As robust as the results are, they are not enough to justify buying, at least in the eyes of the market. Shares are down more than 9.0% in the wake of the report extending the recent sell-off and putting shares at the lowest levels since the IPO. In our view, this stock will likely move lower and there is no target for support at this time. With short-interest well above 12%, we think this stock could move much lower before it begins to move higher again. 

Beware Insider Selling At Gitlab 

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Companies in This Article:

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
GitLab (GTLB)$58.32-0.7%N/A-21.21Moderate Buy$69.19
Thomas Hughes

About Thomas Hughes

Experience

Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.

Areas of Expertise

Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies

Education

Associate of Arts in Culinary Technology

Past Experience

Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights. 

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