E-commerce adoption is one of the most pivotal consumer megatrends of our lifetimes, and it is far from over. According to Morgan Stanley, the industry looks poised to expand by 64% to $5.4 trillion globally by 2026.
Amazon.com (AMZN -1.14%) and Global-e Online (GLBE -4.38%) look like excellent ways for investors to bet on this transformational opportunity. Let's explore why they could turn a $500 investment into significantly more over the long term.
Amazon
With a market capitalization of just over $1 trillion, Amazon is one of the biggest companies in the world. And despite a challenging run over the last 12 months, it still enjoys the advantages in scale and adaptability that helped it become so successful in the first place.
Amazon's business is cyclical, which means it is sensitive to changes in enterprise and consumer confidence. The company reported almost no profit in the fourth quarter as challenges like inflation, cost optimization among cloud clients, and pandemic-era overexpansion ate into margins.
That said, these macroeconomic headwinds probably won't last forever. In the meantime, management is trimming costs through layoffs and price hikes, which could help Amazon emerge leaner and more efficient when economic conditions ease up. Most importantly, the company still retains its advantages in economies of scale and network effects, which is the advantage a platform gets as more people use it.
This moat protects Amazon's cloud computing and e-commerce market shares and allows it to expand into other synergistic opportunities. The company has taken advantage of its shopping-motivated user base to build the world's third-largest digital ad platform, which saw sales jump 19% to $11.6 billion in the fourth quarter. It is also investing in film production after its $8.5 billion acquisition of MGM Studios in 2022.
Global-e Online
Having gone public through an Initial Public Offering (IPO) in 2021, Global-e is an e-commerce infrastructure platform designed to help online businesses sell their products internationally. Its unique niche and rapid growth rate could help ensure long-term success in this competitive industry.
Global-e aims to help its clients grow by breaking down geographic barriers through services like currency conversion, website translation, and import processing. It can also help with sticky issues like customer service and returns to help make international sales as easy as selling domestically.
Global-e enjoys high-profile partnerships with such major brands as Adidas and Walt Disney, such as helping to further e-commerce efforts in Asia.
Image source: Getty Images.
Business is booming despite the challenging macroeconomic environment for the e-commerce industry. Third-quarter revenue jumped by 79% to $105.6 million as Global-e continues to scale up its operations. The company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 62% to $12.5 million, although this figure adds back roughly $5.5 million in stock-based compensation.
Which stock is best for you?
While Amazon and Global-e are both great ways to invest $500 over the long term, they serve different investment strategies. As a larger and more mature company, Amazon offers more safety and diversification into cloud computing and digital advertising. Global-e is smaller and less diversified, but probably offers more long-term growth potential because of its smaller size and rapid top-line expansion.
