Is GTLB a TB Midnight Special or Just Really Scary

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwjby_WQm6D-AhXtkYkEHRXlCGsQz40FegQIERAJ&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3D8rL5a3ZAQxs&usg=AOvVaw38mbpeWiTWN0D4ajOP5Juz

Truth be told I am still traumatized from that scene in the Twilight Zone movie but not so much by GTLBs fall from grace.

On March 13, 2023 GTLB was soaring happily along at a price point of $45.45 or so: this from an already steep bear plummet from an all-time high of about $71. Tragedy then struck and by the end of March 14th the stock had fallen to $31 ad sine change. A dive of just over 30%. So…what happened?

GTLB

Current Price: 33.58
52 Week Range: 30.92 - 70.96
Market Cap: $5.1B

The company reported its latest QTR on March 13, and truth be told the numbers, while not spectacular, were reasonably fair to middling. So it wasn’t beauty that killed the beast - it was Guidance. That pesky guidance that some really smart investors have mentioned they pay no attention to whatsoever.

“Give me that old time religion - Give me that old time religion
It was good enough for someone or other…
And its good enough for me…”

This is not about the Guidance at all: it’s more specifically about whether what’s done is done. And not just done-done but well and finally completely done. Because thats the entire basis for understanding whether GTLB is a Midnight Special TB or Just Really Scary.

Here is its Press Release and Transcript from that fateful day:

https://seekingalpha.com/pr/19193964?source=content_type%3Areact|section%3Aearnings_summary|section_asset%3Aearnings_history|first_level_url%3Asymbol|button%3Apress-release

https://seekingalpha.com/article/4587112-gitlab-inc-gtlb-q4-2023-earnings-call-transcript?source=content_type%3Areact|section%3Aearnings_summary|section_asset%3Aearnings_history|first_level_url%3Asymbol|button%3Atranscript

One fly in the ointment for consideration, may be that even before the Mar 13th report the stock had already started its descent: On March 3 it reached a high of 52.26.

On the plus side, if you travel back in time a bit you can see that there is perhaps history for claims of bottom/support for GTLB at the $34+ range:

May 11 2022 it bounced off 34.48
May 24 2022 it bounced off 34.84
Nov 9 2022 it bounced off 34.22
Mar 15 it reached a depth of 33.45
For 3 weeks or so its been bouncing on a thin line in that area

The question here is simple, and its not about whether the price has stabilized or not - its whether there is any reason to believe it has TB Phoenix potential; or rather, if it is just a scary scary nightmare.

The positives are that its valuation has come down quite a. bit to around 7 or based upon EV/Fwd Rev and its Gross Margins are still remarkably sky high at around 88%. Moreover, if we really can disregard that pesky Guidance then there seems to be a reasonable risk/reward scenario here.

The negatives are more perplexing with my primary one being only that with the economy so borderline with many many question marks that could fall either way - And perhaps many many better TB options around there is no reason to hurry.

Having said all that - while I am really tempted it is still something of a confusing set of circumstances and at the end of the day a confused mind says no. Now a Custer mind…well thats different. No doubt a full on charge in force. And sometimes that rewards the bold - but - sometimes not.

All the Best,

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My scariest Twilight zone memory is when Wm Shattner kept seeing the furring creature on the wing of the jet he was flying in…

Hey 5i5:

Especially when he opened the little sliddy window and the creature was right there.

All the best,

Nothing beats weird creepy childhood nightmares like kid’s tv show Gigglesnort Hotel.

Dreamer

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