What's Going On With GitLab Shares Wednesday?

GitLab Inc. GTLB stock is moving higher on Wednesday. Morgan Stanley initiated coverage of the software company with a Overweight rating and a $70 price target.

The Details: In the note, Morgan Stanley described GitLab as a “key consolidator” in the software delivery market, which the bank noted is historically fragmented. Morgan Stanley explained that the software development market is highly fragmented due to its best-of-breed approach, meaning consumers choose the best technology for each specific function instead of relying on a single solution from one vendor.

Morgan Stanley believes that the market is heading towards consolidation due to the increasing effort required by consumers to utilize multiple best-of-breed solutions and the decreased efficiency among development and operations teams due to the need to switch between various applications.

Although the bank does not believe that the whole market will head towards one platform, it does believe that the “wave of consolidation” will result in a few “emerging enterprise software platforms.” Morgan Stanley believes GitLab will be one of the emerging applications because the platform addresses all workflows involved in releasing and securing software. Furthermore, the company holds market-leading positions in source code management and continuous integration/continuous delivery.

Morgan Stanley also talked about GitLab’s potential revenue, referring to it as the company’s “serviceable opportunity.”

“We view GitLab's serviceable opportunity today mostly centering on the entirety of the software delivery market, security analytics as well as collaboration,” said Morgan Stanley.

“Taken together, these categories represent just under $13 billion in spend in 2023 growing at a 17% CAGR over the next four years to reach $24 billion in 2027.”

How To Buy GitLab Shares

By now you're likely curious about how to participate in the market for GitLab GTLB – be it to purchase shares, or even attempt to bet against the company.

Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy ‘fractional shares,' which allows you to own portions of stock without buying an entire share. For example, some stock, like Berkshire Hathaway, can cost thousands of dollars to own just one share. However, if you only want to invest a fraction of that, brokerages will allow you to do so.

In the the case of GitLab GTLB, which is trading at $52.55 as of publishing time, $100 would buy you 1.9 shares of stock.

If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to ‘go short' a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.

See Also: What’s Going On With Alibaba Stock Tuesday?

GTLB Price Action: At the time of writing, GitLab stock is trading 5.65% higher at $52.79, according to data from Benzinga Pro.

Image: Photo by T. Schneider via Shutterstock