Is GLBE Stock a Buy?

Is GLBE Stock a Buy? eCommerce service platform Global-e Online (NASDAQ:GLBE) offers a unique approach to international sales that sets it apart from larger eCommerce competitors.
After selling off significantly in 2021 and 2022, the stock may be primed for a 2023 comeback. But before we get into that, what does the company actually do?
Global-e Online is an e-commerce platform that allows merchants to sell directly to consumers worldwide. Based in Israel, the company currently focuses on the US and UK markets. However, it is also expanding into Asia, the Middle East and other international markets.
Beyond ordinary payment processing services, Global-e Online facilitates international sales by offering regulatory and customs compliance services. This allows small merchants that otherwise could not navigate the complex rules of international trade to bring their products to market globally.

79% Pop In GLBE Revenues

Global-e Online reported $105.6 million in Q3 revenue, an increase over 79 percent over Q3 2021. GMV was also up 77 percent, rising to 621 million. GAAP gross profit was $40.8 million, while the company’s net loss was $64.6 million.

Over the next five years, GLBE’s revenues are expected to grow by about 23.2 percent annually. The company is also expected to pare back its losses in 2023, which are projected at $1.13 compared to $1.37 over the last 12 months.

With gross margins of over 38 percent, Global-e Online is in a good position to scale and improve its earnings as revenues increase over the next several years.

Q3’s report also offered insights into management’s execution on long-term growth plans. American outbound revenues, for example, rose 184 percent over the previous year.

Revenues from the Asia-Pacific and Middle Eastern regions rose by nearly 500 percent, despite limited market penetration in those areas. As Global-e Online continues to invest in these markets, it’s very likely that top line sales will continue to scale up rapidly.

Global-e Online also continued to partner with new brands to expand international product offerings. One of the most prominent brands the company partnered with in Q3 was American toy manufacturer Mattel. If larger brands begin using Global-e to manage international sales, the company could see excellent top-line growth as a result.

How High Could GLBE Stock Go?

Analysts are bullish on GLBE’s prospects over the coming 12 months. $33.50 per share is slated as the GLBE consensus forecast, representing a potential gain of 33.5 percent from the most recent price of $25.09.

Even more encouragingly, the lowest price target of $26 is still slightly above the current trading price, indicating a low probability of downside risk. All 10 analysts covering the stock rate it positively, with nine offering buy ratings and one offering an outperform rating.

Despite analyst bullishness, GLBE is not particularly attractive when examined through a valuation lens. The stock trades at over 11 times sales and 46 times cash flow.

Given Global-e Online’s growth potential, however, the current price may be justified. One positive in the value category for the company is its lack of debt, which will likely provide it with some insulation from rising interest rates on its own balance sheet, if not its end customer.

Will A Recession Derail GLBE’s Investment Thesis?

Given GLBE’s international sales focus, one of the prime short-terms risks the company faces is that of a global recession in 2023.

The World Bank has recently warned of a possible recession connected to ongoing energy disruptions and rising interest rates. A global economic downturn could cause GLBE to miss its growth targets and cause share prices to stagnate or retreat.

GLBE also carries the usual risks associated with high-growth startups that are not yet profitable. While the company clearly has enormous potential, there’s no guarantee that it will achieve sustainable positive earnings. As such, GLBE is likely a stock best reserved for investors with at least a medium to high appetite for risk.

Is GLBE Stock a Buy?

Global-e Online offers a fairly unique value proposition in the eCommerce space. While large eCommerce platforms like Amazon, eBay and MercadoLibre all facilitate international sales, merchants must handle the logistics themselves.

Global-e Online’s approach to simplifying cross-border sales could give it a first-mover advantage and, eventually, a significant economic moat in the eCommerce industry.

The company’s rapid revenue growth over the past year demonstrates the potential it has to scale. Greater market penetration in Asia and the Middle East could bring considerable increases in both revenue and earnings. GLBE also has the potential to manage cross-border sales for large brands, giving it more exposure to enterprise-scale accounts.

Beyond analyst bullishness, Wall Street also appears to be putting its money to work in buying shares of GLBE. Over the last 12 months, institutional investors have poured $1.4 billion into the stock. The company’s rate of institutional ownership is slightly above 60 percent, and selling activity has been weak compared to buying.

A final positive argument for GLBE is the fact that the stock has sold off over the past year, even as revenues have risen at blistering speeds. The 52-week high for GLBE was $47.70, nearly double the current trading price. Given that GLBE is a high-growth stock whose price is predicated on future earnings rather than current performance, this selloff could offer investors a good entry point.

With all of this said, GLBE is still a fairly risky stock. As a company that has not yet achieved profitability, GLBE could see a great deal of volatility. The share price trades at a premium to sales that can only be justified by rapid growth. If the company grows at a slower pace or encounters unexpected difficulties, the stock could produce significantly lower returns than expected.

Overall, GLBE is an attractive stock for growth investors who don’t mind taking on risk in exchange for high potential returns. GLBE’s unique approach to international trade could make it a dominant platform for cross-border sales among small and large brands alike. In an economic era defined by globalization, Global-e Online could become a key player in international selling.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.