A bearish note in an otherwise bullish industry research report led to a bit of an investor sell-off in GitLab (NASDAQ: GTLB) stock on Monday. The specialized tech company’s shares took a nearly 5% hit as a result, on a day when the S&P 500 index basically traded sideways.
Sold on software
That report, published in the morning and authored by RBC Capital analyst Matthew Hedberg, was an update of notable software stocks in advance of scheduled quarterly earnings reports from companies in the segment.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
According to reports, Hedberg pointed out that such titles did quite well, on the back of quarterly reports that were published relatively early in the current earnings season. The fundamentals of more than a few of those companies topped analyst expectations and provided a refuge for investors spooked about the potential of American tariffs on a range of other industries and businesses.
Hedberg believes that the outperformance trend will continue, at least to some extent, with some reporting companies going as far as to increase their guidance.
Not every company is created equal, though, and Hedberg actually trimmed his expectations for a few. Among them was GitLab, which was one of a handful of companies in his coverage for which he cut his price target. (It wasn’t immediately apparent by how much, however.)
Is this one a true outlier?
I would agree with Hedberg’s assessment that software companies have done better in their most recent quarter than many expected them to. That said, the tariff story seems to be melting away, so to me this isn’t much of a catalyst.
For GitLab specifically, the true story will be told when it releases its first quarter results; this hasn’t been officially scheduled, but it should occur in the very near future.
Should you invest $1,000 in GitLab right now?
Before you buy stock in GitLab, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and GitLab wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $642,582!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $829,879!*
Now, it’s worth noting Stock Advisor’s total average return is 975% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of May 19, 2025
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends GitLab. The Motley Fool has a disclosure policy.