Global-E Online (GLBE 2.57%) went public in mid-May at $25 per share. Since then, the stock's price has soared over 200%, as investors have bought shares of this e-commerce company hand over fist, and it's easy to see why. Online shopping is one of the most pervasive trends of our time, and the market is far from tapped out.

However, even though the share price has tripled, it's not too late to add Global-E to your own portfolio. In fact, I think this recent IPO stock could still grow tenfold over the next 10 years. Here's why.

Person reviewing financial charts on a virtual display.

Image source: Getty Images.

Managing cross-border commerce is a big market opportunity

Domestic e-commerce is fairly straightforward, but cross-border sales are a different story. Merchants have to navigate the complexities of international logistics, language barriers, and various regulatory requirements. Traditionally, businesses have relied upon several service providers to solve these problems, but Global-E takes a more comprehensive approach.

The company offers an end-to-end solution for cross-border commerce. Its platform integrates with a seller's online storefront, localizing details like the language, pricing, and shipping options on a market-by-market basis. Global-E also manages import duties and taxes, and it provides after-sale customer service and returns management.

Why does this matter? International shoppers typically represent 30% of web traffic to global e-commerce sites, but international sales usually comprise just 5% to 10% of total revenue. In other words, current solutions fail to help sellers fully capitalize on that opportunity -- and it's a big opportunity. According to Forrester Research, cross-border e-commerce spend will reach $736 billion in 2023.

Global-E has a strong competitive edge

Global-E has a more holistic solution than any of its rivals, and the company's numbers back that claim. By optimizing the shopping experience for international consumers in over 200 destination markets, Global-E helps businesses accelerate cross-border conversions, often by more than 60%.

This creates a flywheel effect. By facilitating transactions and logistics across a range of geographies, Global-E collects market-specific data relating to consumer preferences. Using that data, its platform leans on artificial intelligence to surface relevant insights for merchants, helping them further boost international conversion rates.

This accomplishes two things: First, Global-E makes money by taking a cut of gross merchandise value, so it wins when its merchants succeed. Second, as Global-E's AI models become more intelligent, its ability to drive cross-border sales should improve, drawing even more merchants to its platform.

This virtuous cycle has already been a powerful growth driver. As of the most recent quarter, Global-E had 522 merchants on its platform, up 85% from the end of 2019. That uptick in adoption has powered an impressive top-line performance.

Metric

Q2 2020 (TTM)

Q2 2021 (TTM)

Change

Revenue

$90.1 million

$190.3 million

111%

Data source: Global-E SEC filings. TTM: trailing-12-months. CAGR: compound annual growth rate.

Global-E's gross profit margin has expanded dramatically over time, rising from 22% in 2018 to 36% in the most recent quarter. Management attributes this to the growing volume of its market-specific data. And the company is well-positioned to maintain that momentum.

The Global-E platform is a very sticky product. Gross retention has been over 98% since 2018, meaning less than 2% of customers cancel service each year. And net retention hit 172% in 2020, indicating a 72% uptick in average customer spend. In both cases, these impressive figures evidence the value that Global-E creates for its clients.

Moreover, the company recently signed a partnership agreement with Shopify, the most popular e-commerce software vendor in the United States, whereby Global-E will be the exclusive provider of cross-border solutions for Shopify merchants. This could be a significant growth driver for both companies -- the Shopify platform currently supports 1.7 million merchants, each of which could easily become a Global-E customer.

The bottom line

Global-E stock trades at a pricey 59 times sales, but given the company's strong competitive position and massive market opportunity, that valuation may not look so crazy in hindsight.

Consider this scenario: To produce tenfold returns, Global-E would need to achieve a market cap of $110 billion, and I think that's possible. If the company can grow sales at 40% per year through 2031, total revenue would reach $5.5 billion. Assuming the stock trades for a more reasonable 20 times sales at that point, Global-E would have a market cap of exactly $110 billion.

Of course, no one knows the future, and I've speculated on several metrics over a great length of time. But it's not hard for me to imagine this scenario playing out over the next decade. That's why I think this growth stock is a smart long-term investment.