Software Stock Surging After Beat-and-Raise

Options volume is running at 13 times the intraday average

Deputy Editor
Dec 6, 2022 at 10:55 AM
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GitLab Inc (NASDAQ:GTLB) stock is enjoying a post-earnings surge today, up 9.4% at $41.92 at last glance. The company reported smaller-than-expected third-quarter losses of 10 cents per share after the close yesterday, as well as a revenue beat. Furthermore, the software name raised its 2023 revenue forecast. 

In response, RBC raised GTLB's price target to $60 from $55, citing "the durability of revenue growth and emerging leverage in the model," while Piper Sandler cut its price objective to $60 from $67, despite seeing consolidation tailwinds. Overall, analysts are bullish towards the stock, with 13 of the 14 in coverage carrying a "buy" or better rating, while the 12-month consensus price target of $68.25 sits at a 60.3% premium to current levels. 

On the charts, GTLB has been slowly rising from its Nov. 9 six-month lows, with an upward trendline connecting higher lows since then. However, the descending 40-day moving average is still pressure the shares. Year-to-date, the equity is down 50.7%. 

As is typical after earnings, GitLab stock is seeing an options surge. So far, 11,000 calls and 6,043 puts have been exchanged, which is 13 times the intraday average amount. The December 45 and 50 calls are the most active contracts, with positions opening at the latter. 

It's also worth noting that short interest represents 11.5% of the stock's available float. It would take over five days to buy back these bearish bets, at GTLB's average pace of trading. 

 

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