The past year has been a hot time for IPOs, some of the most intense we’ve seen since the early days of the dot.com boom. Upstart tech companies like Bumble (NSDQ: BMBL), Palantir Technologies (NSDQ: PLTR), DoorDash (NSDQ: DASH) and Airbnb (NSDQ: ABNB) produced big wins for early-stage investors and new issues like Stripe and Roblox.
GitLab isn’t a name flying under the radar among industry pros, but it certainly hasn’t gotten the fanfare that the Bumbles and Robinhoods of the world have received. However, the company has attracted attention with impressive valuation and its recent IPO. GitLab, a metadata repository, allows programmers and coders to track changes in data files and sets across the internet using the computer program Git. Keeping an open-source repository offers an easy way to track changes in these files.
Is GitLab’s stock the next overnight success story in the tech sector? Let’s look at the company's history and weigh a few pros and cons.
[we will insert main CTA]
[we will insert table of contents]
When Did GitLab IPO?
GitLab IPO’d on October 14, 2021 at $77 per share. The stock closed that day at $103.89, increasing the firm’s market cap to $14.9 billion.
GitLab History
GitLab bills itself as “the complete DevOps platform.” DevOps, a portmanteau of software development and IT operations, helps coders and programmers improve the speed and efficiency of their products. By combining development and IT, GitLab offers a one-stop shop for businesses to streamline computer projects.
Launched in 2014, GitLab was originally a software application designed by Ukrainian entrepreneurs Sid Sijbrandij and Dmitriy Zaporozhets. Built on the Git system, which helps groups of programmers track alterations of source code, GitLab grew rapidly with its ability to streamline the programming process. By 2015, the platform had over 800,000 users, including major business clients like IBM and Alibaba.
Several successful funding rounds followed and GitLab began exploring options for a potential IPO. The company let employees sell shares in December in a secondary sale, which put the company at an estimated $6 billion valuation.
GitLab has been a popular investment for venture capitalists and private equity. The firm has done 9 funding rounds according to CrunchBase, raising over $400 million. Some of the lead investors in the firm have been Goldman Sachs, ICONIQ Capital, Light Street Capital and Two Sigma Private Investments. In the company’s most recent funding exercise (a secondary market venture), GitLab raised an impressive $195 million, putting its estimated valuation around $6 billion.
GitLab Stock Potential
From a small Ukrainian startup to a major player in the software industry, GitLab now has nearly 1,300 employees and recorded $150 million in revenue in 2020. Fast-growing tech firms have been some of the darling of IPO investors in recent memory, especially Palantir and Bumble.
While GitLab doesn’t have the name recognition (and gets confused with Microsoft-owned GitHub), software development isn’t a niche industry and the company has the potential to accelerate client growth rapidly over the next decade. Platforms like GitLab have become crucial for programmers to bring new projects forward with speed, precision and security.
What are the potential downsides? GitLab already has a number of competitors — GitHub, Bitbucket, Jenkins and CircleCI, just to name a few. While GitLab will be one of the first DevOps repositories to a publicly traded stock, public companies often can’t be as limber as their private counterparts. GitLab will need to fend off stiff competition in this space.
GitLab Shares Hold Promise
GitLab shares will end up as a hot item when the company eventually goes public, but even the most heralded tech stocks can suffer from early underperformance. Underwriters often underprice tech IPO shares, which allows the insiders to profit when the stock gets a first day pop. IPOs tend to underperform the market during the first 10 months to a year of trading. Chewy (NASDAQ: CHWY) was a popular IPO that saw shares reach $40 on the first day of trading in July 2019, but the stock declined from there and didn’t surpass $40 again until April 2020. However, we’re only 4 months out from GitLab’s IPO date.
Should you purchase GitLab shares? If you can get them from your broker before trading begins, the stock could be a big winner in your portfolio. If shares remain unavailable, buying them off the exchange could be risky. If the first day pop holds for GitLab, the stock could be a loser for those who buy on the open market. Know when the insider lockup period ends if you want to invest in GitLab.