Please ensure Javascript is enabled for purposes of website accessibility

Shopify Takes $193 Million Pre-IPO Stake in Partner Global-E

By Danny Vena - May 7, 2021 at 4:13PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The e-commerce leader is investing heavily in one of its partners.

While it may not be a household name, Global-E Online (NASDAQ: GLBE) is indispensable for cross-border e-commerce around the globe. The company takes on many of the challenges encountered with international selling, including foreign languages, currency exchange, inter-country regulatory compliance, customs and duties, and local payment methods. This removes many of the roadblocks and speed bumps that are part of international online retail. 

Global-E Online is scheduled to begin trading on the Nasdaq Stock Exchange sometime next week, using the ticker "GLBE," though the final date has yet to be confirmed. The company is planning to offer 15 million shares, priced in a range of $23 to $25 per share. The underwriters will have the option to sell an additional 2.25 million shares, depending on market demand.

Couple lying on floor at home, shopping online with credit card and laptop.

Image source: Getty Images.

The company has an arrangement with Shopify (SHOP -0.47%), which has taken a keen interest in the company. In the wake of its initial IPO filing last month, Shopify bought 7.75 million shares in the company, acquiring a 6.5% stake, and establishing a significant service and partnership agreement with Global-E, making the company the exclusive provider of cross-border services for Shopify's customers. After the IPO, that stake will slip to 5.4%, but Shopify also acquired warrants that entitle it to an additional 11.85 million shares over the coming two years, which could bring the value of Shopify's stake to nearly $500 million if the current pricing holds. 

For the year ended Dec. 31, 2020, Global-E produced revenue of $136.3 million, up 107% year over year, accelerating from 70% gains in 2019. The company also achieved the scale necessary to generate profits, with net income of $3.9 million, improved from a loss of $7.5 million in 2019. Its net dollar retention rate shines, remaining above 134% since 2018, climbing to an impressive 172% in 2020. 

Given those impressive metrics and the obvious synergies, it's no wonder Shopify jumped aboard before the IPO.

Danny Vena owns shares of Shopify and has the following options: long January 2023 $1,140 calls on Shopify and long January 2023 $1,160 calls on Shopify. The Motley Fool owns shares of and recommends Shopify. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Shopify Inc. Stock Quote
Shopify Inc.
$40.42 (-0.47%) $0.19

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.