What happened
Shares of Global-e Online (GLBE -1.18%) stock declined 14% in April, according to data provided by S&P Global Market Intelligence. Although there wasn't any company news, the business was on the receiving end of continued investor backlash toward unprofitable growth stocks in the current volatile climate.
So what
Simple and necessary services, like checkout in various currencies and instant customs calculations by country, enable e-commerce retailers to do business globally. However, it doesn't make sense for most organizations to develop them in-house. Global-e runs a platform that offers cross-border solutions for enterprise customers.
Cross-border commerce is a no-brainer for companies that want to increase sales, and Global-e has an impressive roster of high-profile clients like Adidas and Disney. It also recently acquired competitor Borderfree, with its large client base, including Macy's and Nordstrom. And it has a partnership with Shopify, through which its services are offered to the company's millions of merchant clients.
Right now, e-commerce has been subdued due to inflation, a return to physical shopping, and tremendous growth during the pandemic that it's hard to now match. Yet Global-e is still posting high growth. That portends even better performance when the e-commerce landscape improves.
For this young and growing company, though, expenses have been building and losses have been increasing. Revenue increased 67% for the full year in 2022, but net loss widened from $75 million to $195 million. Part of that was due to stock-based compensation, which is typically high for a company that recently went public, and part came from the amortization of warrants related to its relationship with Shopify.
Management is guiding for revenue to increase about 46% in the 2023 first quarter and about 40% for the full year. It gave a broad range of possibilities considering the volatile macroeconomic outlook.
Now what
Global-e went public in 2021 and has reported high growth ever since. Its stock has dropped about 67% since the highs it reached in 2021 but is relatively flat since the initial public offering.
Investing enthusiasm has been mounting this year, and the stock is up 28% in 2023 despite the drop in April. Shares trade at a price-to-sales ratio of 10, which is fairly expensive. At this price, investors might want to see more growth or improvements in profitability before taking a position. But the growth trajectory looks very strong, and risk-tolerant investors might want to start a small position even now.
