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Luke Kawa

GitLab slumps as Q4 guidance underwhelms and management issues erroneous full-year outlook

GitLab is sinking in early trading Wednesday after a management oopsie added to the sting of its third-quarter results, released after the close on Tuesday.

While the software development company exceeded expectations on the top and bottom lines, its Q4 forecast of adjusted net income per share of $0.22 to $0.23 on sales of $251 million to $252 million failed to impress, as the midpoints of these ranges were virtually in line to a touch below Wall Street’s view.

Furthermore, the totality of its guidance didn’t add up: in its first press release, management said adjusted net income per share would come in between $0.95 and $0.96.

Given that Q1 adjusted net income per share came in at $0.17, Q2 was $0.24, and these Q3 results showed $0.25, that implied its Q4 guidance should have been $0.29 to $0.30 to be consistent with the full-year view. Late on Tuesday night, GitLab corrected this error, stating that its full-year view was actually for $0.88 to $0.89 in adjusted net income per share.

That certainly didn’t help improve sentiment on the company, given that the Street was already a little negative on the details of its results and the outlook.

“GitLab’s softening net revenue retention rates and lower overall customer additions highlight execution challenges and reinforce our concerns about AI-driven headwinds to seat growth and the pace of AI feature-led upselling and monetization,” wrote Bloomberg Intelligence senior technology analyst Sunil Rajgopal.

GitLab’s net retention rate slipped to 119% in Q3, below estimates for 119.8%.

The stock is seeing a flurry of pessimism across Wall Street this morning, with Mizuho lowering its price target to $47 from $52, KeyBanc reducing its to $49 from $53, Goldman Sachs cutting to $42 from $48, Wells Fargo trimming to $45 from $50, and Barclays and Truist edging theirs lower to $42 from $44.

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Luke Kawa

Hedge funds are following retail traders into the Magnificent 7

Hedge funds are following retail traders into the stocks the masses never stopped buying.

“As we kick off earnings for megacap tech stocks, this stood out: [hedge funds] have started buying Mag7 stocks again this month though positioning remains well below the peak levels seen in early 2016,” writes Goldman Sachs’ Cullen Morgan.

Goldman PB Mag 7
Source: Goldman Sachs

In early April, JPMorgan strategist Arun Jain noted that retail investors had basically been selling everything but the Magnificent 7 stocks as part of a more cautious stance due to the Iran war.

(Apple has been a longstanding exception to this trend, presumably because retail traders aren't fond of its hands-off approach to AI.)

JPM Retail flows

Last August, Jain discussed how retail activity tended to “crowd in” institutional buyers in meme stocks, while Goldman’s John Marshall advised clients to piggyback on stocks beloved by retail traders. Speculative, retail-geared assets proceeded to go on a tremendous run that soured in October.

But there are some early indications that a similar bout of speculative fervor is bubbling up once more.

markets
Luke Kawa

POET Technologies surges above $10 for first time in 4 years amid explosion in call volumes

POET Technologies is up nearly 40% this week as options market activity goes haywire in a faint echo of what got the stock on retail traders’ radars in October.

As of 11:12 a.m. ET, more than 10 calls have changed hands for every put traded. This bullish impulse has propelled the stock above the $10 threshold for the first time since March 2022.

Shares of the optical communications firm briefly dipped last week after Wolfpack Research said it was short the company because its investors would be exposed to an “IRS tax nightmare.”

The company responded that day saying it was taking measures for US shareholders that “should mitigate certain potential adverse US federal income tax consequences to it that could otherwise result from the Company’s status as a passive foreign investment company.”

Luke Kawa
4h
The parabolic surge in Avis reached new heights, with shares halted for volatility

More motivated buyers than motivated sellers.

Travelers at Sacramento International Airport (SMF)
markets
Matt Phillips

GE Aerospace falls after leaving earnings guidance unchanged

Jet engine maker GE Aerospace slid in early trading Tuesday, as its better-than-expected Q1 results were overshadowed by uninspiring guidance.

It reported:

  • Q1 adjusted revenue of $11.61 billion vs. the $10.71 billion consensus expectation.

  • Adjusted earnings per share of $1.86 vs. the $1.60 consensus estimate.

But management left full-year 2026 adjusted EPS guidance where it was at between $7.10 and $7.40, compared to a consensus expectation of $7.49 from analysts.

“We’re holding our full-year guidance across the board, given the macro uncertainty, though, with our strong start to the year, we are trending toward the high end of that range,” CEO Larry Culp said on the conference call.

GE Aerospace hit an air pocket in March as the start of the US war against Iran sent energy prices soaring and hurt expectations for the profitability of commercial carriers. A rally in April had pushed the stock close to positive territory for the year, but it’s solidly in the red after the results today.

markets
Max Knoblauch

Trump says he doesn’t like potential United-American merger but would “love somebody to buy Spirit”

President Trump on Tuesday told CNBC that he doesn’t like the idea of a United Airlines-American Airlines merger, but would “love somebody to buy Spirit.”

“Maybe the federal government should help that one,” Trump said on Tuesday, referring to Spirit’s attempts to emerge from bankruptcy.

Trump’s thoughts on United-American are an update from last week, when White House Press Secretary Karoline Leavitt said the potential megamerger was “not something the president or the White House have an ​opinion on or are weighing in on.”

American and United shares dipped following Trump’s comments, as did Spirit rival Frontier Airlines.

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