GitLab Stock Down 60% From Highs as Investor Sells 61,700 Shares — Is the Pullback a Buying Opportunity?

On November 14, Connecticut-based Stadium Capital Management disclosed a sale of 61,700 GitLab shares in the third quarter.

What Happened

According to a Securities and Exchange Commission (SEC) filing dated November 14, Stadium Capital Management sold 61,700 shares of GitLab (NASDAQ:GTLB) during the third quarter. The transaction contributed to the position's value falling by approximately $2.8 million, bringing its total holding to 84,683 shares, worth $3.8 million at quarter-end.

What Else to Know

After the sale, GitLab accounted for 4.1% of the fund’s 13F AUM; the position was previously 6.1% of AUM as of the prior quarter.

Top holdings after the filing:

• NYSE:BLDR: $22.2 million (23.7% of AUM)
• NYSE:BC: $19.5 million (20.8% of AUM)
• NASDAQ:SNBR: $18.4 million (19.6% of AUM)
• NYSE:NSP: $13 million (13.9% of AUM)
• NYSE:LCII: $8.9 million (9.6% of AUM)

As of Friday's market close, GitLab shares were priced at $41.06, tumbling 36% over the past year and far underperforming the S&P 500, which is up 14% in the same period.

Company Overview

Company Snapshot

GitLab operates as a leading provider of DevOps lifecycle software, enabling organizations to accelerate development and improve visibility across teams. The company operates a subscription-based business model, providing software and value-added services to customers, which include enterprise, mid-market, and public sector organizations seeking to streamline software development and deployment processes. Its strategy centers on delivering a comprehensive, single-application platform that integrates planning, development, security, and deployment tools, reducing complexity and driving operational efficiency for customers worldwide.

Foolish Take

GitLab’s stock has slumped more than 60% from 2021 highs, and even after a partial recovery this year, the name remains a test of whether accelerating fundamentals can translate into sustained multiple expansion. The fund’s reduction suggests a more measured stance despite GitLab posting one of its strongest operating performances yet.

According to the filing, the firm sold 61,700 shares of GitLab in the third quarter, trimming the position to 84,683 shares valued at $3.8 million. Although the stake decreased, GitLab continues to deliver solidly: Second-quarter revenue rose 29% year-over-year to $236 million, with non-GAAP operating margin expanding to 17%. The company also generated $49.4 million in operating cash flow, up sharply from $11.7 million a year earlier, and the company also announced some notable product momentum, including its AI-native GitLab Duo Agent Platform and a three-year AWS collaboration.

For long-term investors, the takeaway is that GitLab’s fundamentals remain solid even as shorter-term sentiment has cooled. Efficient growth, strong cash generation, and expanding enterprise demand continue to justify some patience.

Glossary

13F: A quarterly SEC filing by institutional investment managers disclosing their equity holdings.

Assets Under Management (AUM): The total market value of investments managed by a fund or firm on behalf of clients.

Position: The amount of a particular security or asset held by an investor or fund.

Top Holdings: The largest investments in a fund's portfolio, usually ranked by market value.

Quarter: A three-month period used for financial reporting and analysis, often abbreviated as Q1, Q2, etc.

DevOps: A set of practices combining software development and IT operations to shorten development cycles and improve software quality.

Lifecycle: The complete process from creation to retirement of a product, service, or investment.

Platform: A software or technology environment that supports applications or services for users or developers.

TTM: The 12-month period ending with the most recent quarterly report.