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Buy or Fear GitLab Stock at $48?

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GitLab (NASDAQ: GTLB), a firm that offers tools to assist teams in managing their software development lifecycle, experienced a stock increase of 10.6% yesterday following reports that Datadog is contemplating a takeover bid of $60 per share. Nonetheless, aside from this acquisition speculation, we find GTLB stock currently unappealing at its price of approximately $48, mainly due to its elevated valuation compared to its fundamentals.

Our conclusion is derived from an evaluation of GTLB’s current and historical operating performance and financial health. Specifically, our analysis across essential parameters—including Growth, Profitability, Financial Stability, and Downturn Resilience—suggests that the company holds a Moderate overall operating and financial condition.

That said, if you are looking for an upside with less volatility than investing in an individual stock like GTLB, consider the High Quality Portfolio. It has consistently outperformed its benchmark—a mix of the S&P 500, Russell, and S&P MidCap indexes—and has realized returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided superior returns with lower risk in comparison to the benchmark index; less of a roller-coaster ride, as shown in HQ Portfolio performance metrics.

How Does GitLab’s Valuation Look vs. The S&P 500?

In terms of what you pay per dollar of sales or profit, GTLB stock appears very costly in comparison to the broader market.

  • GitLab possesses a price-to-sales (P/S) ratio of 9.1, while the S&P 500 has a figure of 3.2
  • Furthermore, the company’s price-to-free cash flow (P/FCF) ratio stands at 217.4 compared to 20.7 for the S&P 500

How Have GitLab’s Revenues Grown Over Recent Years?

GitLab’s Revenues have significantly increased in the past few years.

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  • GitLab has observed its top line grow at an average rate of 37.4% over the last 3 years (in contrast to an increase of 5.4% for the S&P 500)
  • Its revenues have grown 29.0%, rising from $665 Mil to $858 Mil in the last 12 months (compared to growth of 5.2% for the S&P 500)
  • Additionally, its quarterly revenues rose by 29.2% to $236 Mil in the most recent quarter from $183 Mil a year prior (against a 6.1% increase for the S&P 500)

How Profitable Is GitLab?

GitLab’s profit margins are significantly inferior to most companies within the Trefis coverage universe.

  • GitLab’s Operating Income over the past four quarters was $-101 Mil, indicating a very poor Operating Margin of -11.8% (compared to 18.6% for the S&P 500)
  • GitLab’s Operating Cash Flow (OCF) during this timeframe amounted to $42 Mil, reflecting a very poor OCF Margin of 4.9% (as opposed to 20.3% for the S&P 500)
  • Over the previous four-quarter period, GitLab’s Net Income was $-9.7 Mil – signifying a very poor Net Income Margin of -1.1% (relative to 12.7% for the S&P 500)

Does GitLab Look Financially Stable?

GitLab’s balance sheet appears very robust.

  • At the conclusion of the most recent quarter, GitLab’s Debt was $0.0, while its market capitalization is $8.0 Bil (as of 10/16/2025). This suggests a very strong Debt-to-Equity Ratio of 0.0% (compared to 21.7% for the S&P 500). [Note: A low Debt-to-Equity Ratio is considered favorable]
  • Cash (including cash equivalents) constitutes $1.2 Bil of the $1.5 Bil in Total Assets for GitLab. This results in a very strong Cash-to-Assets Ratio of 77.8% (in contrast to 7.0% for the S&P 500)

How Resilient Is GTLB Stock During A Downturn?

GTLB stock has performed considerably worse than the benchmark S&P 500 index during several recent downturns. Concerned about the effect of a market crash on GTLB stock? Our dashboard Now Is Not The Time To Buy GitLab Stock includes a thorough analysis of how the stock fared during and following past market crashes.

Inflation Shock (2022)

  • GTLB stock experienced a decline of 79.5% from a peak of $130.88 on 8 November 2021 to $26.77 on 4 May 2023, against a peak-to-trough drop of 25.4% for the S&P 500
  • The stock is still not restored to its pre-Crisis high
  • Its highest value since then is 77.60 on 11 February 2024, and it is currently priced at around $48

Putting All The Pieces Together: What It Means For GTLB Stock

In summary, GitLab’s performance against the parameters outlined above is as follows:

• Growth: Very Strong
• Profitability: Very Weak
• Financial Stability: Very Strong
• Downturn Resilience: Very Weak
• Overall: Moderate

However, keeping in mind its high valuation, we believe that the stock is unattractive, which bolsters our assertion that GTLB is not a favorable stock to acquire at the current prices. Of course, it is possible we could be incorrect in our evaluation, and if there is indeed an offer from Datadog at a premium to the current prices, the stock will likely trend upwards. That said, investors should consider all the associated risks, considering that the stock does not appear appealing from a fundamental viewpoint.

While it may be prudent to steer clear of GTLB stock for the time being, you might want to investigate the Trefis Reinforced Value (RV) Portfolio, which has surpassed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to deliver impressive returns for investors. What accounts for this? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks offered a responsive approach to capitalizing on favorable market conditions while minimizing losses when markets decline, as detailed in RV Portfolio performance metrics.