GitLab stock drops after weak full-year guidance
Shares of GitLab (GTLB) are trading nearly 20% lower Tuesday morning after the company posted its fourth quarter earnings. Despite beating revenue expectations, with $163.8 million versus an expected $158.3 million, the company put its full-year guidance below Wall Street expectations.
Yahoo Finance Anchors Brad Smith and Seana Smith break down the latest developments for GitLab, explaining how one Mizuho analyst claims the company is well positioned for growth despite the results. GitLab will be integrating AI to help customers build and manage software.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Nicholas Jacobino
Video Transcript
SEANA SMITH: Let's take a look at another trending ticker that we are watching, and that is GitLab shares. Sinking in the pre-market, off nearly 20% after the company forecasted full year revenue of $725 to $731 million. That was below the Street's expectations. Now the company's guidance for adjusted earnings per share also coming in below what the Street was looking for, but it might not all be bad news.
Just when you're looking at a 20% drop in the stock, you're asking what the heck is going on. But Mizuho, their analyst there that covers the name, was out saying that yes, this was a bit disappointing regarding the company's guidance, but he's saying it is time to ignore the noise.
He believes GitLab is oversold at these levels, and remains confident in the company's ability to grow. He's got a price target of $75 a share. But yes, we are seeing some of that excitement that we've seen play out in shares of GitLab here over the last several months as they disappoint on that guidance. We're seeing a huge impact on shares.
BRAD SMITH: Yeah, development, security operations platform here. And by integrating AI, they're saying this can help them really kind of throughout the software development life cycle, allowing their customers to plan, build, manage, deliver software efficiently here. But it's really going to come back to where the business momentum is moving at this point in time.
Q4 revenue grew 33% year over year. They added about 1,900 basis points of non-GAAP operating margin. What's all this mean? For them, that signals consistent execution across the business. It's a larger question as to where within this broader kind of life span as well these milestones are contributing to the broader responsible growth that they've been really trying to not just initiate but continue to message to Wall Street and the analysts covering the stock as well.
SEANA SMITH: Yeah, and again, shares have soared just about 45% this year. And you take that into account, and that's why we're seeing such a reaction to that disappointing guidance number here out before the bell.
