Shares of GitLab (GTLB 1.38%), the cloud-based DevSecOps platform, struggled last year as a combination of slowing revenue growth, a high valuation, and concerns about lower customer retention weighed on the stock, and investors seemed to take a wait-and-see approach to its AI strategy.
By the end of the year, the stock had fallen 33%, according to data from S&P Global Market Intelligence, a disappointing performance during a year in which tech stocks largely soared. As you can see from the chart below, the stock fell sharply in the weeks leading up to the "Liberation Day" tariffs announcement, but unlike the rest of the tech sector, Gitlab did not rebound. In fact, it slumped into the end of the year, hitting a 52-week low.
What happened with Gitlab last year
Gitlab started off the year on a high note, soaring on hopes for AI and tech stocks on momentum from late in 2024.
Gitlab tracked with the market sell-off in February and March on fears about a trade war and cuts to the federal budget. The stock has relatively little exposure to those risks, but its valuation makes it sensitive to broader fears in the market.
A better-than-expected fourth-quarter earnings report in early March, briefly arrested that decline, but the stock continued to fall in the following days as the same fears persisted. Gitlab's guidance for the year was also worse than expectations.
By the third-quarter report in December, Gitlab's guidance had improved, showing that it was too conservative to start with, but its growth rate had slowed enough to deflate the bull case for the stock. In the third quarter, revenue rose 25% to $244.4 million, and investors seem to have some doubts that generative AI, which has made coding much easier, is a net positive for the company rather than a threat. There's also concern that it's losing ground to rival GitHub, which is owned by Microsoft.
Following weak guidance in its third-quarter earnings report, the stock slumped to end the year and has continued to decline in 2026, despite the broader enthusiasm around AI.
Image source: Getty Images.
What's next for Gitlab
Following the sell-off last year, and into this year, Gitlab now trades at a price-to-sales ratio of just 6, making the stock significantly cheaper than it was a year or two ago.
However, Gitlab will have to convince investors it can thrive in the AI era, maintain its growth rate, and deliver a meaningful profit on a generally accepted accounting principles (GAAP) basis.
For now, investors seem to think that may be too tall a task.
