Trying to figure out what to do with GitLab stock? You are definitely not alone. Whether you are looking at your screen wondering if it is finally time to buy or thinking about whether to lock in gains, there is plenty happening with this software company to catch your attention. In just the last week, GitLab climbed 10.6%, which turned heads after what has largely been a bumpy ride this year. The stock is still down 12.2% year-to-date and about 9.7% over the last twelve months, but that sudden upward move was enough to spark new debates among both bulls and skeptics.

A big part of the recent momentum traces back to optimism around GitLab’s expanded product integrations and developer tools. These have gained buzz in tech circles. Industry watchers are noticing a wider embrace of GitLab's DevSecOps platform among enterprise customers, feeding hopes for more stable growth ahead. Some analysts see these shifts as early signs that risk perceptions could be shifting for the company.

Still, valuation is where the story gets really interesting. Based on six different valuation checks, GitLab scores a 2, meaning it appears undervalued on two fronts, but not the majority. That suggests there is a mix of upside and caution here, with the numbers pointing in more than one direction.

Let’s break down what those key valuation approaches reveal. There is an even better way to understand GitLab’s true worth that we will get to at the end.

GitLab scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: GitLab Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates what a company is really worth by projecting its future cash flows and discounting them back to today’s value. For GitLab, this means evaluating how much cash it is expected to generate in the coming years and determining what those future dollars are worth now.

According to the most recent figures, GitLab’s last twelve months (LTM) Free Cash Flow stood at $33.5 million. Analysts project meaningful growth ahead, with FCF estimates from six industry analysts growing steadily each year. By 2030, projections suggest GitLab’s free cash flow could reach around $526.7 million. It is important to note that analyst consensus only extends five years out and that numbers beyond this point are algorithmically extrapolated by Simply Wall St.

These future cash flows are discounted using reasonable assumptions and summarized into one “intrinsic value.” For GitLab, the DCF model returns an estimated fair value of $57.14 per share, suggesting the stock trades at a 13.4% discount relative to current prices.

In summary, the DCF indicates that GitLab appears modestly undervalued if the optimistic cash flow trajectory is maintained.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests GitLab is undervalued by 13.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: GitLab Price vs Sales

For software companies like GitLab that may not yet be consistently profitable, the Price-to-Sales (P/S) ratio is often the go-to valuation metric. It provides a meaningful perspective by focusing on how much investors are paying for each dollar of revenue, especially in periods when earnings are volatile or negative. A company’s P/S ratio reflects both market expectations for future growth and the perceived level of risk. This means that higher-growth or lower-risk firms tend to command higher multiples, while riskier or slower-growing businesses trade at discounts.

GitLab is currently trading at a P/S multiple of 9.6x. This sits above the software industry average of 5.3x and higher than the peer group’s average of around 7.2x. At first glance, this premium may suggest the market is pricing in stronger growth, superior margins, or other unique advantages. But headline numbers alone do not tell the whole story.

That is where Simply Wall St’s “Fair Ratio” comes in. The Fair Ratio, at 10.1x for GitLab, incorporates a sophisticated blend of factors including expected growth, profitability, risk, industry, and market capitalization, providing a more nuanced view than simply comparing with peers or the overall sector. Since the Fair Ratio is so close to GitLab’s current P/S multiple, it indicates the market’s valuation is in line with the company’s fundamentals as assessed by these deeper metrics.

Result: ABOUT RIGHT

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your GitLab Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your story about a company, connecting how you view GitLab’s products, strategy, and market position with the future numbers you expect, such as growth, margins, and ultimately, fair value. With Narratives, you move beyond standard ratios to a more personalized approach: you spell out your assumptions and see how your outlook translates into a fair value for the shares. This turns investment decisions into a living process, where you can easily compare your fair value to the current price and gauge whether it is time to buy, hold, or sell. Narratives on Simply Wall St’s Community page are simple to use, accessible to everyone, and update automatically when new data like news or earnings is released, so your analysis always stays relevant. For instance, some investors believe GitLab’s cutting-edge AI integrations and strategic partnerships could propel the share price as high as $85, while others worry about competition and project a fair value as low as $46, based on their distinct assessments. In short, Narratives empower you to make decisions grounded in your own perspective, turning stock analysis into a dynamic, tailored experience.

Do you think there's more to the story for GitLab? Create your own Narrative to let the Community know!

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.