Why GitLab Stock Crashed Today

Core Viewpoint - GitLab's stock has experienced a significant decline despite reporting strong earnings, primarily due to conservative guidance for the upcoming quarter [1][5]. Financial Performance - GitLab reported a 25% year-over-year revenue growth for Q3, achieving $244.4 million in sales, surpassing analyst expectations of $239.3 million [2][3]. - The company reported non-GAAP earnings of $0.26 per share, but under GAAP, it recorded a loss of $0.05 per share, indicating a negative operating profit margin of 5% [2][5]. Guidance and Market Reaction - For Q4, GitLab's guidance is for earnings of $0.22 to $0.23 per share, with revenue expectations of $251 million to $252 million, which aligns closely with Wall Street's expectations [5][6]. - The stock price fell by 17.2% following the earnings report, reflecting investor concerns over the guidance provided [1][4]. Valuation Metrics - Post-decline, GitLab's stock appears to be fairly valued with a market cap of approximately $6.2 billion and a price-to-free cash flow ratio of 25.5x, based on trailing free cash flow of $242 million [6].