Shares of hot e-commerce stock Global-e Online (GLBE 2.44%) jumped 16% in December according to data provided by S&P Global Market Intelligence. There wasn't any significant news related to the company in December, but the market rallied in reaction to the Federal Reserve saying it would begin to cut interest rates in early 2024. That's positive news for most companies, and specifically for retail and e-commerce.
A service that every e-commerce retailer needs
Global-e sells cross-border payments solutions for e-commerce retailers. Its services are easily integrated into a retailer's web site, and the retailer can show options for 100 different currencies, plus localized checkouts and instant customs calculations. It opens up the business to a global market, which can lead to higher revenue.
It has several different packages for businesses large and small, but it works with some of the largest and most well-known companies in the world, such as LVMH, and through the recently acquired Borderfree, Macy's and Nordstrom.
It has been reporting solid growth, although sales increases have decelerated in the inflationary environment. Revenue increased 27% year over year in the 2023 third quarter. It's still in its unprofitable, high-growth stage, but adjusted gross margin expanded from 41.5% to 44.4% in the third quarter, and net loss improved from $64 million to $33 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which removes things like one-time charges and expenses related to the initial public offering, increased from $12.5 million to $22.1 million.
Global-e has a partnership with Shopify, giving it exposure to the e-commerce giant's millions of merchant customers. Shopify recently launched a white-label solution called Shopify Markets Pro using Global-e's platform, and management said it's going well so far.
Management said it was already seeing indications that spend was picking up as inflation seems to be moderating, and it's expecting growth to accelerate in 2024.
Getting closer to profitability at scale
Global-e stock gained 92% in 2023, and as the economy improves and retail picks up, Global-e should have an even better year in 2024. Its partnership with Shopify is another growth driver.
Global-e stock is expensive, trading at nearly 12 times trailing-12-month sales. However, that's close to the cheapest it's ever been. As a young growth stock with tons of opportunity, it's worth some premium, and risk-tolerant investors might consider buying shares even at this price.
