Global-e Online: A Hidden Gem in the E-commerce NicheGlobal-e Online: A Hidden Gem in the E-commerce Niche Global-e Online, a lesser-known e-commerce player, offers hidden growth potential. This company provides software solutions to enterprise customers, enabling them to capture market share through global cross-border trade. Benefits of Global-e’s Platform: * Localized checkout and 100 currency options * Instant customs calculations * Data insights for tailored market strategies * Extensive customer testimonials showcasing increased revenue Key Partnerships: * Shopify is an early investor and provides support through its merchant base * Wix.com has also partnered with Global-e for cross-border services Strong Growth and Financial Performance: * Revenue growth of 24% year-on-year * Gross merchandise volume growth of 32% * Increasing gross margins and adjusted EBITDA Impact of Interest Rate Changes: * Expect strong results when interest rates fall, leading to increased consumer spending Valuation and Outlook: * Traded at a price-to-sales ratio of 10, reflecting its premium valuation as a small company with high potential * Some volatility may occur until interest rates decline and profitability is achieved * However, it remains a potential growth stock for investors willing to tolerate some risks Conclusion: Global-e Online is a promising player in the e-commerce niche, benefiting from its specialized software solutions and partnerships with industry leaders. Despite its current valuation, it offers long-term growth potential for investors willing to embrace volatility.
Expect strong results when interest rates fall.
Shop has become one of the largest e-commerce companies in the world. It is the backbone for millions of small merchants and is in the process of capturing market share from enterprise companies.
But if you’re looking for a smaller player just starting out, you might consider Worldwide-e Online (GLBE -3.07%) inventory. It grows fast and it also gives you exposure to Shopify. Here’s how.
A niche player in e-commerce
Global-e is an e-commerce company that you may not know, because it doesn’t sell products to end users. Like Shopify, it offers software-as-a-service solutions for enterprise customers. It works with small businesses, but its core consists of large corporations that rely on its products for cross-border trade.
Customers connect the platform to their websites and Global-e’s platform gives customers the ability to buy internationally right away, with localized checkout, 100 currency options, instant customs calculations and other services that make it easy to hit the buy button. It also provides customers with data that helps them understand regional preferences and take the right steps to capture market share.
Global-e has a steady stream of new, high-profile customers who are seeing the benefits of global shipping, and it has a large number of customer testimonials about increased revenue after signing up. Some examples include Fold, which saw a 109% increase in international sales after partnering with Global-e, and Anastasia Beverly Hills, which saw a 90% increase in international sales.
It works with more than 1,000 brands, including Alo Yoga, Allsaints and Kim Kardashian’s Skims, and it added Heydude by Crocodiles and Donna Karan in the first quarter of 2024, among many others. Management said it has dozens of new customers live or in the pipeline.
Revenue rose 24% year-on-year in the first quarter, and gross merchandise volume increased 32%. Global-e is still not profitable, but it is improving. Adjusted gross margin rose to 45.3% from 41.4% in the first quarter, and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $21.3 million this year from $14.5 million last year.
Growth has slowed as the overall retail sector continues to struggle with high inflation. When interest rates fall, it should benefit from higher spending.
Shopify’s Trust and Support
Shopify was an early investor in Global-e and still has warrants to buy more shares. Global-e amortizes these warrants quarterly, which takes a toll on its financial statements. But what’s left will be fully amortized by the end of 2025, and as gross margins grow and the company scales efficiently, it could quickly become profitable.
Shopify is also partnering with Global-e, offering its platform to its merchant base. It recently launched Shopify Markets Pro, which is essentially a white-label packaging of Global-e’s solutions. Management expects this to lead to increased sales, and so far it has told investors that the rollout is going well.
Global-e also recently announced a similar partnership with website maker Wix.com to provide cross-border services to its e-commerce customers.
Global e-stocks fall, but won’t stay that way
Global-e shares surged last year but have cooled in 2024, falling 7% so far this year. Growth is slowing, the company is still unprofitable and inflation is a major roadblock. Wall Street analysts still expect losses through at least next year.
Even at its current price, I wouldn’t call it cheap; Global-e shares trade at a price-to-sales ratio of 10. However, because it’s such a small company with so much potential, it gets a premium valuation.
Global-e stock may see some fluctuations until interest rates come down and the company becomes profitable. However, if you can handle some volatility and are willing to take risks, it could be a good candidate for a growth stock.
Jennifer Saibil has positions in Global-E Online. The Motley Fool has positions in and recommends Global-E Online, Shopify, and Wix.com. The Motley Fool recommends Crocs. The Motley Fool has a disclosure policy.
