3 things GitLab’s wild IPO pricing says about public markets

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sitting here waiting I’m still digesting the company’s IPO price for GitLab to actually start trading.

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When we first caught up with GitLab’s IPO filing, Nerdshala did a little math magic and decided it was unlikely the company would be able to achieve its $10 billion valuation at its start.

At that price point, everyone seemed ready to commit a murder; Even the company’s most recent investors will see a quick return on their final capital in DevOps Unicorn. The ultimate value of the company was approximately $6 billion in private markets. Secondary sale of its equity a year ago, And the last primary value placed on GitLab in 2019 was less than $3 billion.

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The company exceeded our calculations.

From an initial IPO price range of $55 to $60, GitLab rapidly increased its target from $66 to $69 per share. It was no surprise that the company aimed higher in its IPO pricing, as its first numbers were a bit soft. However, the scale of the difference between the company’s first and second IPO price range was a shock.

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Then the company went $77 per share price, once again defying its earlier valuation estimate.

GitLab’s IPO price had 143,534,821 shares outstanding at $11.1 billion. Doing a little more math, the company’s fully diluted valuation is around $12.6 billion.

Therefore, the company’s IPO is a success from a fundraising and valuation perspective; If the company’s stock rises sharply when it begins trading, then unfairly blame both the investment bankers and the former startup’s private backers who value the company. Less than $3 billion at the end of 2019.

In a nutshell, this is what I’m thinking of when we consider a company’s IPO pricing:

  • Revenue growth is good, but revenue growth is god-level with top-tier SaaS metrics: Working to figure out why GitLab was so far into its first IPO price range hasn’t been easy. There isn’t a single answer. But I think GitLab’s excellent SaaS metrics helped, because they paint a picture of a company with hugely increased results. For example, in 2020, GitLab had a net retention of 148%. During global pandemic. That number rose to 152% in the first half of 2021. No matter what happens financially, slowing down GitLab is going to prove difficult. So, in a sense, net retention is an effective hedge against a macroeconomic slowdown. who did No The pitfalls of GitLab’s IPO pricing.

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