GitLab sinks as restructuring rattles the Street

Short interest adds another dimension to the story, though positioning is less extreme than the price action might suggest. Around 10.9% of the free float is currently estimated short — a meaningful level, but one that actually eased slightly over the week, down 0.5%. Looking back further, shorts were running closer to 11.4% through much of mid-April before trimming as the stock found a floor around $20-21 in late April and early May. That reduction suggests at least some short-covering preceded this week's drop. The borrow market remains comfortable: availability is loose, with cost to borrow at just 0.41% annually — up 43% week-on-week in percentage terms, but from a very low base. There is no squeeze dynamic in play here, and no sign of urgency in the lending market.

Options positioning does not suggest the market had braced for this week's move. The put/call ratio is running at 0.37, almost exactly in line with its 20-day average of 0.38, and far below the 52-week high of 0.62. That means options traders were not loading up on downside protection heading into the restructuring announcement — the selloff was not well-hedged. The ORTEX short score sits at 48.8 out of 100, broadly neutral, with the score barely moving across the past two weeks. This is a name the data was reading as unremarkable from a short-positioning standpoint right up to the event.

Institutional ownership offers some context on who holds the risk. PRIMECAP Management added a striking 6.1 million shares in Q1, making it one of the largest recent buyers in the cap table at roughly 4.3% of shares. BlackRock added 330,000 shares as recently as April 30. On the other side, Atreides Management trimmed 2.3 million shares and HMI Capital cut 2.2 million through year-end 2025. On the insider side, founder and Executive Chairman Sytse Sijbrandij sold 116,200 shares at $20.77 in April — worth $2.4 million — while CEO Bill Staples made two small open-market purchases totalling around $128,000 at the end of March. Net insider activity over the past 90 days runs to a net positive in share count terms, though that is heavily skewed by the PRIMECAP accumulation on the institutional side.

With the next earnings event due on June 2, the setup entering that print is charged. The last quarterly result in March saw the stock fall 4.4% on the day and 11.5% over the following five days — the market punishing guidance misses or tone at a time when growth deceleration was already a concern. The June report will arrive with the Street freshly re-rated, the restructuring narrative still unsettled, and investors watching whether the AI-agent pivot is a credible growth lever or a costly distraction. The distance between the current price and analyst targets may look wide, but it has been collapsing steadily, and how management frames the restructuring costs and near-term revenue outlook will determine whether that gap narrows on the company's terms or the Street's.