Trying to decide what to do with GitLab stock right now? You are not alone. After all, market swings have made even the savviest investors pause before clicking “buy” or “sell.” Over the last year, GitLab’s shares have slipped by 18.5%, including a recent 4.9% dip in just the past week. The longer-term picture is a little brighter, with a modest gain of 6.4% over the past three years. These shifts have unfolded against a backdrop of a changing tech landscape and evolving market appetite for growth stocks. Notably, investor sentiment seems to be weighing both on GitLab’s innovation potential and the sector’s broader risks.
But how should you interpret these price movements? Can the recent declines present a buying opportunity, or is there more downside risk ahead? One way to cut through the noise is to focus on the numbers that matter most for value investors. By running GitLab through six classic undervaluation checks, the score comes out to 4 out of 6. This suggests the company is undervalued by several yardsticks. Still, the real story goes beyond just tallying up checkmarks. Next, we will walk through the main valuation approaches, and later, explore a perspective on value that might change the way you look at this stock for good.
Why GitLab is lagging behind its peers
The Discounted Cash Flow (DCF) model is a popular valuation method that calculates a company’s intrinsic value by forecasting its future cash flows and discounting them back to their present value. For GitLab, this approach draws from current free cash flow and projects growth over the next decade, using analysts’ estimates for the first five years and then extending forecasts based on trends in the software industry.
Currently, GitLab generates $33.5 million in free cash flow (FCF). Based on current projections, analysts expect GitLab’s annual FCF to increase to $526.7 million by 2030. Most of these near-term estimates come from direct analyst input, while longer-range figures are based on careful extrapolation.
According to the DCF calculation, GitLab’s fair value is $56.92 per share. Compared to its recent trading price, this suggests the stock is about 21.6% undervalued based on future cash flow expectations. For patient investors who focus on long-term value, GitLab may offer a compelling margin of safety at today’s price.
Result: UNDERVALUED
GTLB Discounted Cash Flow as at Oct 2025
Our Discounted Cash Flow (DCF) analysis suggests GitLab is undervalued by 21.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks.
Story continues
For companies like GitLab that are not yet consistently profitable, the Price-to-Sales (P/S) ratio is often the go-to valuation metric. The P/S ratio helps investors compare a company’s market value to its total revenue. This makes it helpful for assessing high-growth technology businesses where earnings are still ramping up. In fast-growing sectors, higher P/S multiples can be justified by strong revenue expansion and future profitability potential. On the other hand, higher risk or slowing growth typically calls for more restrained valuations.
Currently, GitLab trades at an 8.67x P/S ratio. This is significantly above the software industry average of 5.04x and also higher than the peer group’s average of 7.07x. At first glance, this might seem expensive versus sector standards. However, simply averaging peer or industry multiples can be misleading, as it ignores differences in growth rates, profit margins, or risk profiles.
This is where the Simply Wall St “Fair Ratio” comes in. The Fair Ratio for GitLab is 10.00x, which reflects a proprietary calculation that weighs GitLab’s revenue growth, industry dynamics, profit margins, and market capitalization, along with company-specific risks. Because it accounts for these factors, the Fair Ratio offers a more comprehensive sense of what investors should pay for each dollar of GitLab’s sales compared to broad benchmarks.
Compared to the Fair Ratio, GitLab’s current P/S multiple is slightly below what would be expected given its outlook and fundamentals. This suggests that, based on this approach, the stock is undervalued relative to its growth-adjusted fair value.
Result: UNDERVALUED
NasdaqGS:GTLB PS Ratio as at Oct 2025
PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is simply the story behind a company’s numbers. It is your perspective on where the business is headed, how it will grow, and why it is worth either more or less than what the market says today. With Narratives, you connect GitLab’s outlook to a financial forecast based on your own assumptions about future revenue, margins, and market dynamics. This approach then leads to an estimated fair value.
Narratives make this process easy and accessible, and on Simply Wall St’s Community page you can interact with thousands of perspectives contributed by millions of real investors. Narratives let you compare fair value estimates to today’s share price, so you can decide whether to buy or sell based on a story you agree with. They automatically update when new information, such as results or news, changes the outlook.
For example, some GitLab Narratives are optimistic, highlighting its AI partnerships and forecasting rapid margin expansion, resulting in a fair value of $85 per share. Others take a more cautious view, factoring in market saturation and leadership changes, and reach a lower fair value around $46. Narratives help you weigh these scenarios and choose the one that best matches your own view.
Do you think there’s more to the story for GitLab? Create your own Narrative to let the Community know!
NasdaqGS:GTLB Community Fair Values as at Oct 2025
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.
Companies discussed in this article include GTLB.
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