Investors in Global-E Online (GLBE 2.08%) have had a volatile ride lately. After going public at $25 in May last year, the stock rallied more than threefold to a high of around $84. Since then, the stock has fallen back to $34 as of this writing.

While current investors may cringe at the volatility, potential investors are looking at the company now as the stock becomes cheaper. But before we all rush into the stock, here are two things smart investors should know about this up-and-rising tech stock.

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How Global-E mints its cash

Founded in 2013, Global-E aims to make cross-border e-commerce transactions seamless and frictionless for global merchants. It started its business by targeting clients in the UK and has expanded into newer regions across the United States, Europe, and Asia.

Global-E's value proposition is straightforward: helping enterprising merchants solve all the problems of selling abroad. This includes customer acquisition, localization of shopping experience, big data analytics, cross-border logistics, tax issues, and others. In doing so, Global-E helps free up merchants' time, allowing them to focus solely on what they do best -- selling products to customers everywhere in the world.

While it is still early days, there are signs that the Global-E is doing the right things. On one end, its gross merchandise value (GMV) expanded rapidly from zero in 2014 to $774  million in 2020, indicating that its merchants were growing their business nicely. GMV rose by 86% to $352 million in the third quarter of 2021. On top of that, merchant count grew from 283 in 2019 to 442 in 2020, and net dollar retention rate rose 172% in 2020 -- in other words, merchants are spending more money with Global-E over time.

The rapid rise in GMV, in turn, contributed to the surge in revenue -- revenue more than tripled from $39 million in 2018 to $136 million in 2020. As Global-E charges its merchants a percentage of GMV as fees, a growth in GMV will lead to a higher income. Of the $136 million in revenue in 2020, 37% is related to platform fees, while the remaining 63% falls under fulfillment services.

A look into the future of Global-E

After more than tripling its revenue between 2018 and 2020, Global-E continued its strong performance -- revenue grew by 77% to $59 million in the third quarter of 2021. Though impressive, these numbers touch just the tip of the iceberg.

According to the company's IPO prospectus, the global e-commerce market could reach $5.8 trillion by 2023. Within that, the cross-border e-commerce industry could hit $736 billion. With a GMV of $774 million in 2020, Global-E has barely even covered 1% of this opportunity!

There are many ways Global-E can grow in the coming years. As a start, the company can leverage the growth of existing customers as they grow their business globally. Next, it can acquire new clients from existing markets. To this end, the young company's partnership with Shopify (SHOP 2.95%) comes in handy as it leverages Shopify's existing merchants who plan to expand globally. Doing so not only quickens Global-E's customer acquisition process but also keeps its customer acquisition cost low. Besides adding merchants from existing markets, Global-E can target merchants in new geographies to expand its total addressable market further.

Although Global-E has good prospects, there are still risks that could derail the company from its long-term growth plan. Of course, there is no guarantee that the service provider can execute as it grows in size and complexity. There are enough examples of well-to-do growth companies that fail to keep up to their promise. The young company needs to prove that it can sustain its execution as it scales its business.

Besides, investors are betting on Global-E's partnership with Shopify to propel the former to greater heights. Even though the relationship is highly beneficial today, there is the possibility that Shopify could develop a solution internally that competes against Global-E in the future. After all, Shopify is famous for its innovation and execution capabilities, so investors shouldn't rule this out.

All in all, Global-E is riding on a strong tailwind thanks to the growth of cross-border e-commerce. Still, investors need to consider both the upside and downside before investing in this young company.