How to Invest in Flexport in 2024

Flexport is on a mission to make global trade easier. The company has taken a technology-driven approach to global logistics. Its software is disrupting the freight forwarding industry -- companies that help facilitate international trade.

Flexport aims to usher the freight forwarding industry into the 21st century by replacing old-school methods of doing business (phones, fax machines, and physical paper) with automation. The company believes its innovative approach should make it faster and cheaper for its clients to ship their products around the world.

It has a bold goal to eventually become a very profitable company and a darling of Wall Street. That has many investors eagerly awaiting its initial public offering (IPO). Here's a look at what you need to know about Flexport and how to potentially buy its stock ahead of its IPO.

Is Flexport publicly traded?

Is Flexport publicly traded?

Flexport isn't a publicly traded company as of late 2023. Several leading venture capital funds own the logistics platform. The privately held company also counted e-commerce enabler Shopify (SHOP 1.11%) as one of its largest investors.

When will it IPO?

When will Flexport IPO?

Flexport didn't have an IPO on the calendar as of late 2023. The company's current focus is on returning to profitability, which it aims to achieve by the end of 2024 or early 2025. Once it reaches sustainable profitability, it will likely pursue an IPO so that the venture capital funds holding its shares can begin exiting their investments.

How to buy

How to buy Flexport stock

Because Flexport hasn't completed an IPO, investors can't buy shares of the supply chain company in their brokerage account. However, accredited investors (i.e., high-net-worth individuals or those with high incomes) can sometimes buy pre-IPO shares of companies like Flexport on secondary platforms, such as EquityZen or Forge Global (FRGE 0.52%).

Accredited investors who really want to get in ahead of its IPO should check out those platforms to see whether they have shares of Flexport available to buy. Non-accredited investors will need to continue waiting until the company launches its IPO.

In the meantime, people interested in the supply chain trend could consider investing in a publicly traded company focused on capitalizing on the same markets Flexport serves. Here are three options to consider.

1. Shopify

Shopify is a leading global commerce company that provides essential internet infrastructure to its customers. It used to operate a rival logistics platform, Shopify Logistics. However, it sold that business, including Deliverr, to Flexport in early 2023. In exchange, Shopify received a 13% equity stake in Flexport.

It also had an existing equity interest in the global logistics platform, so Shopify provides investors a backdoor to gain equity exposure to Flexport. It could eventually distribute its Flexport stock to shareholders after that company completes its IPO.

2. UPS

UPS (UPS 0.14%) is a leading global logistics company. It specializes in ground delivery, with more than 100,000 delivery trucks. UPS also has a meaningful air fleet with almost 300 planes. That's significantly bigger than Flexport's fleet of three planes.

The other big difference between UPS and Flexport is that Flexport makes most of its money on ocean freight shipping. It buys space on container ships in bulk and leases the space to its customers, making money on the spread between the shipping line's prices and what it charges customers.

3. FedEx

FedEx (FDX 0.12%) is very similar to UPS. The main difference is that FedEx specializes in global air express freight. It had more than double the number of aircraft compared to UPS, with almost 700 planes.

It also has a larger international presence, allowing it to charge cheaper rates than rivals seeking to ship internationally. International air cargo is a focus for Flexport, which is working to improve the profitability of its planes.

Investors who want to buy one of these Flexport alternatives can purchase shares in any brokerage account. Here's a step-by-step guide on how to invest in stocks like Flexport.

Step 1: Open a brokerage account

You'll have to open and fund a brokerage account before buying shares of any company. If you still need to open one, here are some of the best-rated brokers and trading platforms. Take your time to research brokers to find the best one for you.

Step 2: Figure out your budget

Before making your first trade, you'll need to determine a budget for how much money you want to invest. You'll then want to decide how to allocate that money. The Motley Fool investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years.

However, you don't have to get there on the first day. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks and then grow from there.

Step 3: Do your research

It's essential to thoroughly research a company before buying its shares. You should learn about how it makes money, its competitors, its balance sheet, and other factors to make sure you have a solid grasp on whether the company can grow value for its shareholders over the long term.

Step 4: Place an order

Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:

• The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
• The stock ticker (SHOP for Shopify, UPS for UPS, and FDX for FedEx).
• Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order because it guarantees you buy shares immediately at that market price.

Once you complete the order page, click to submit your trade and become a shareholder in a publicly traded company benefitting from the same growth trends as Flexport.

Investors would follow a similar process to buy an IPO stock like Flexport when it goes public. Once shares become available, select Flexport's chosen stock ticker to buy shares through your brokerage account.

Profitability

Is Flexport profitable?

As a private company, Flexport doesn't need to disclose its financial results to the public. So, there wasn't much publicly available information about its profitability as of late 2023.

However, a Wall Street Journal article in late 2023 provided a glimpse into the company's financial situation. At the time, the company wasn't profitable. But founder and CEO Ryan Petersen told the Journal that Flexport "expects to get back to profitability by the end of next year or early 2025."

The logistics company has taken several steps to boost its profitability. It cut its annual operating expenses by 25%, partly driven by a roughly 20% reduction in its workforce.

The company's long-term goal is to become a "profitable public company that throws off lots of cash that can be a darling of Wall Street," according to Petersen. It needs to return to profitability, go public, and increase its cash flow to achieve its vision.

Should I invest?

Should I invest in Flexport?

Since it's not public, most people can't invest in Flexport yet. However, the company plans to go public eventually, possibly as early as 2025. That gives you some time to research the company before buying shares.

Research is an important step. It could increase your conviction that the company will be a great investment. Or you could discover something in your research that changes your mind about investing in the company. With that in mind, here are some reasons why you might want to invest in Flexport when it goes public:

• You like the company's technology-driven approach to the logistics sector.
• You prefer to invest in founder-led companies.
• You believe Flexport will be successful in its aim to become a profitable and cash-flowing company.
• You like its acquisition of Shopify's logistics business, which will increase its scale and growth potential.

On the other hand, here are some reasons you might decide not to invest in Flexport's IPO:

• You don't know what Flexport does or how it makes money.
• You're concerned about its management, given the comments of its former CEO, who publicly called out the company's reporting. The former Amazon (AMZN 3.43%) executive was handpicked by Peterson and yet stayed with the company for under a year.
• Given the cyclical nature of the global logistics industry, you're not sure Flexport will reach its ambitious goal of being highly profitable.
• You don't think it can disrupt the global freight forwarding industry.

ETF options

ETFs with exposure to Flexport

Since Flexport is still a privately held company, investors can't passively invest in its stock through an exchange-traded fund (ETF).

However, people interested in investing in the logistics sector have a couple of ETF options to consider, including:

• The ProShares Supply Chain Logistics ETF (NYSEMKT:SUPL) focuses on leading logistics companies in shipping, railroad, air, and trucking. It owned shares of about 40 companies in late 2023, led by Old Dominion Freight Line (ODFL -7.24%), FedEx, and Union Pacific (UNP -0.31%). The fund had a 0.58% ETF expense ratio.
• The Pacer Industrials and Logistics ETF (NYSEMKT:SHPP) focuses on companies providing transportation, logistics, hardware/robotics, software, or ancillary services supporting global supply chains. The fund's top holdings in late 2023 include SAP (SAP 0.59%), Union Pacific, and UPS. The ETF had a 0.6% expense ratio.

Related investing topics

The bottom line on Flexport

Flexport is using technology to disrupt the freight forwarding industry. The company believes its approach will enable it to grow into an industry leader and become very profitable, allowing it to create a lot of value for shareholders in the future. This upside potential has investors eagerly anticipating its eventual IPO.

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