Gitlab IPO

Should I Buy GitLab Shares Following Its Blockbuster Market Debut?

The latest name in SaaS finally went public last week, but is it a good buy for investors, or is this one to keep at arm’s length?

Another day, another IPO that has the folks over on Wall Street all in a flutter. 

GitLab (NASDAQ: GTLB), the pretender to GitHub’s ‘Git’ throne, made its public debut on Thursday and has seen its stock price soar.

But is GitLab a good buy yet?

First off, do you know what ‘Git’ is?

Git is software for tracking changes in any set of files, usually used for coordinating work among programmers collaboratively developing source code during software development. 

Let’s move on to GitLab, which saw its stock price soar 35% when it debuted on Thursday, followed by another jump on Friday. This left it with a share price of $115 apiece and an estimated market cap of $16.5 billion — a far cry from the $66 per share it initially planned.

Why the hype though?

Well, GitLab fits the mold of the classic high-growth, unprofitable business-to-business software provider that investors seem to love so much these days. In fact, it is so loved that it is now worth more than twice as much as what Microsft paid to acquire its nearest competitor, GitHub.

On the one hand, it has the advantage of not being owned by Microsoft, meaning that the latter’s competitors will gravitate towards it for Git offerings. On the other hand, Microsoft is as big as it gets, and can easily undercut GitLab’s prices.

As for financials, a first glance looks good as revenue in the latest quarter climbed 69% to $58.1 million. However, we’ll also see that losses widened to $40.2 million from $9.4 million a year before due to sales and marketing costs, while total losses for the past year exceeded $200 million. 

It’s very early days yet, but be sure to keep an eye on MyWallSt for a First Look at GitLab from our analyst team.

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