Shares of GitLab (NASDAQ:GTLB) dropped 8.8% to $24.35 in premarket trading on Wednesday after the software development platform issued a fiscal 2027 earnings outlook that came in below Wall Street expectations.
The company forecast adjusted earnings per share of between 76 cents and 80 cents for fiscal 2027, well under analysts’ consensus estimate of $1.05, according to LSEG data.
In response to the announcement, at least five brokerage firms lowered their price targets for the stock.
Analysts at TD Cowen said in a note following the results that rising levels of software development activity should continue to support demand for DevSecOps solutions. However, they added that GitLab still needs time to demonstrate the strength of its competitive positioning.
The analysts also highlighted the rapid evolution of artificial intelligence within the software development ecosystem and the emergence of AI-native threats, noting that the company must prove its capabilities in what they described as the AI 2.0 era.