Is GitLab A Good Buy?

When Can I Buy GitLab Stock?

This fast growth, sticky business is going public today so how can you buy GitLab shares and is it a good investment opportunity right now?

The company, which is a direct competitor to Microsoft-owned GitHub, is set to go public today via IPO. GitLab’s services help developers share and manage code, which you can guess is an important task in our digitally-driven world. GitLab is currently worth $6 billion so many are excited for it to make its stock market launch. 

Wall Street is hyping up its IPO, as interest in technology companies continues to increase for investors. Before you think about buying GitLab shares, let’s take a look into the company, its financials, and growth potential. 

What is GitLab?

GitLab is a provider of internet hosting for software developers who use Git. Based in San Francisco, the company was founded in 2014 and seems to have grown in popularity since then. Straight from the horse’s mouth, GitLab said:

GitLab is a web-based DevOps lifecycle tool that provides a Git repository manager providing wiki, issue-tracking and continuous integration and deployment pipeline features, using an open-source license, developed by GitLab Inc.” 

The idea for the business began in 2011 when a Ukrainian programmer, Dmitriy Zaporozhets, identified a lack of communication tools in the market for developers. Seeing a big opportunity, Zaporozhets teamed up with co-founder, Sid Sijbrandij, to set up the company. 

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When is GitLab going public?

GitLab is going public today, 11 October, and will trade on the Nasdaq under the ticker ‘GTLB.’ 

What price are GitLab shares going public at?

GitLab is seeking to raise up to $624 million through its IPO. The firm is planning to offer 8.42 million class A shares priced between $55 and $60 a share. This target would give GitLab a valuation of almost $9 billion.

GitLab’s financials 

In 2020, GitLab recorded revenues of $150 million, up from the $81 million it achieved in the year-ago period. This sharp revenue growth, and hitting the $100 million sales milestone, are likely contributing factors that pushed it to go public. 

GitLab makes money via its paid plans and subscriptions add-ons. 

To attract users, it does have a freemium product that allows users to access a complete DevOps platform. For more functionality, GitLab also offers a Premium package at $19 per month and an Ultimate package for $99 per month. This revenue model is common for subscription services and offers recurring revenue, this allows shareholders to gauge how much revenue the company is going to make by counting how many subscribers they have. That is why user numbers will be a key metric for investors to follow. 

GitLab’s growth potential 

Over the past six years, GitLab has made a number of strategic acquisitions. These buys have provided us with valuable insight into the company’s future intentions. In 2015, it acquired an open-source web application called Gitorious in the hopes of strengthening the development of its open-source Git management application. In 2018, GitLab bought security company Gemnasium, a service that alerts developers to open-source threats, and then it went on to acquire other security firms Peach Tech and Fuzzit. GitLab purchased the machine learning tool UnReview as part of its plan to use machine learning to help automate the selection of code reviewers. 

Is GitLab a good investment? 

The firm looks like a solid investment, evidenced by its having strategic partnerships with Big Tech giants Google and Amazon Web Services. If it continues to bring in these big-name clients, GitLab is looking like a good option for investors looking to get in on the booming developer operations space. 

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