Is Now The Time To Reassess GitLab (GTLB) After Recent Share Price Rebound?

• Wondering whether GitLab at around US$31.82 is offering value or just volatility? This article breaks down what the current price may be telling you.
• Over the past week the stock is up 18.9%, and over the last 30 days it is up 32.3%, yet year to date it is still down 12.1% and over the last year it has fallen 31.8%.
• These swings are set against a backdrop of ongoing attention on software and developer productivity platforms, where investors are weighing long term adoption trends against changing risk appetite. Evergreen coverage like this aims to step back from short term headlines and focus on what the current share price may imply about long term expectations.
• GitLab currently scores a 3 out of 6 valuation check score. Next you will see how that stacks up under cash flow models, multiples, and an alternative way of thinking about value that brings the story together at the end of the article.

Find out why GitLab's -31.8% return over the last year is lagging behind its peers.

Approach 1: GitLab Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimates of the cash a company may generate in the future and discounts those amounts back to today to arrive at an estimate of what the stock could be worth now.

For GitLab, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is reported at $222.93 million, and analyst based projections plus Simply Wall St extrapolations extend out to 2035. For example, projected free cash flow for 2031 is $515.05 million, with intermediate years such as 2026 and 2027 estimated at $208.55 million and $216.80 million respectively, before discounting.

After discounting these projected cash flows back to today, the model produces an estimated intrinsic value of $55.34 per share. Compared with the recent share price around $31.82, this framework suggests GitLab stock is trading at about a 42.5% discount to that DCF estimate, which points to a meaningful gap between price and this cash flow based value view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests GitLab is undervalued by 42.5%. Track this in your watchlist or portfolio, or discover 46 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for GitLab.

Approach 2: GitLab Price vs Sales

For companies where profits are limited or still developing, the P/S ratio often gives a clearer picture of how the market is valuing each dollar of revenue. It sidesteps near term earnings noise and lets you compare what you are paying for current sales.

What counts as a “normal” P/S depends on what investors expect for future growth and how much risk they see in the business. Higher expected growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk tends to pull that multiple down.

GitLab trades on a P/S of 5.62x, compared with the Software industry average of 3.87x and a peer average of 4.21x. Simply Wall St’s Fair Ratio for GitLab is 6.36x, which is a proprietary estimate of what the P/S could be given factors like earnings growth, industry, profit margin, market cap and risk profile. This Fair Ratio can be more tailored than a simple comparison to peers or industry averages because it adjusts for GitLab’s specific characteristics rather than treating all software companies as identical. With the current 5.62x P/S sitting below the 6.36x Fair Ratio, the stock screens as trading below that Fair Ratio estimate.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your GitLab Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Meet Narratives, where you attach a clear story about GitLab to your own forecast for revenue, earnings and margins, link that forecast to a Fair Value, and then compare it with the current price to decide whether the stock looks attractive or stretched.

On Simply Wall St, Narratives sit inside the Community page and are used by millions of investors as an accessible tool that connects qualitative views to the numbers. Narratives update automatically when fresh news or earnings arrive and help you see, for example, how one GitLab investor might anchor on a higher Fair Value around US$72.00 while another leans toward the more cautious US$24.00 view. Both perspectives are laid out transparently so you can decide which story, and which Fair Value, aligns better with your own expectations.

For GitLab, we’ll make it really easy for you with previews of two leading GitLab Narratives:

🐂 GitLab Bull Case

Fair Value: US$72.00 per share

Implied discount to this fair value from the recent US$31.82 price: about 56%

Revenue growth assumption used in this narrative: 25.8% a year

• AI driven development and security workflows on GitLab are expected to support higher activity on the platform and potentially faster annual recurring revenue growth than seat growth alone.
• Analysts in this camp model earnings reaching about US$224.0m and earnings per share of US$1.19 by around December 2028, assuming profit margins move toward the broader US software industry level.
• To line up with this view, the stock would need to trade on a P/E of 77.1x those 2028 earnings, which is a higher multiple than the current US software industry P/E cited in the narrative.

🐻 GitLab Bear Case

Fair Value: about US$30.30 per share

Implied premium to this fair value from the recent US$31.82 price: about 5%

Revenue growth assumption used in this narrative: 15.3% a year

• Analysts behind this narrative see solid AI and security features and partnerships, but think rising competition, slower net new customer additions and business model shifts could limit how much of that flows through to long term earnings.
• The assumptions used include revenue of about US$1.5b and earnings of US$187.4m by 2029, with the stock valued on a P/E of 38.3x those earnings and a discount rate of 8.5%.
• They also flag execution risks around go to market changes, the move to hybrid seat plus usage pricing, and softer small business demand, which could all affect revenue growth and margin expansion.

If you want to see how these GitLab stories are built, including all the earnings, cash flow and multiple assumptions, you can step through the full Community Narratives and compare them with your own expectations for the stock See what the community is saying about GitLab.

Do you think there's more to the story for GitLab? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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