What happened
Shares of cross-border e-commerce company Global-e Online (GLBE 0.78%) lost nearly 70% of their value in the first half of 2022, according to data provided by S&P Global Market Intelligence. The company is experiencing incredible growth, but it's high valuation and increasing losses are seen as drawbacks in a market that prioritizes safety and value.
So what
Global-e provides global shipping and payment solutions for e-commerce companies. These services include checkout in more than 200 currencies, one-click shipping and customs fees information, and many similar functions.
The platform integrates into almost any existing website and makes it easy to go global. It's not surprising that many companies are opting in, purchasing packages that can increase their global reach and up their revenue.
The company is posting solid growth, including a 65% year-over-year sales increase in the 2022 first quarter. It has recently inked or expanded deals with many top companies, including LVMH and Adidas, and it has an easy integration tool to work with Shopify stores.
It also just completed its acquisition of Borderfree, a competing cross-border e-commerce company previously owned by Pitney Bowes. Borderfree has many high-profile clients such as Macy's and Williams-Sonoma, and the merger solidifies Global-e's leading position in the industry. The deal went through for $100 million, and Borderfree is expected to net $40 million in revenue this year.
It's an all-cash deal, and this will weigh more heavily on Global-e's bottom line in the near term. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell from $5.2 million in the 2021 first quarter to $3.3 million this year, and the net loss widened from $1.6 million last year to $53.6 million this year. Much of that was related to its acquisition of Flow Commerce in January and the amortization of warrants Global-e issued to Shopify.
Now what
Global-e is a classic growth stock. It's demonstrating high revenue increases, and is investing in its business through acquisitions and partnerships. It's fairly small right now, with $275 million in trailing-12-month earnings.
Shares are now trading at $24 each, or exactly the same as the first-day opening price at its initial public offering. Investors aren't too confident right now. At the current price, shares are trading at 14 times trailing-12-month sales, which isn't cheap. But if you have time to wait for growth stocks to get back into favor and for the company to get closer to profitability, this is a great opportunity to buy shares at a low price.
