Global-E Online is high risk, high reward with the reward outweighing the risk

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There may not be borders when it comes to e-commerce, but there are borders. Challenges always exist when doing business in another country, whether it is the consumer or the business. This is where Global-E Online (GLBE) meets a need. The company offers a software-as-a-service (SaaS) platform, allowing retail merchants to leverage an already successful national website and go international, while Global-e manages localization , payments, including taxes and currency, and physical delivery.

In short, they act as a translator and an intermediary. it reminds me of the red from the movie Shawshank Redemption. When a customer visits a site, they see it in their local language, even if the business is located halfway around the world. If that customer orders, Global-E handles delivery logistics and returns on behalf of the company, including ensuring that prices are easily understood by both parties.

The company has more than 400 brands using its platform, but what excites investors and analysts the most is its partnership with giant Shopify (SHOP). This partnership has yet to generate significant revenue, but it should act as a powerful catalyst over the next few years. Don’t miss the fact that Shopify owns around 5% of GLBE, with enough warrants to more than double its stake. Even without the help of Shopify, GLBE recently reported third quarter revenue of $ 59.1 million, a growth rate of 77% year-over-year. Gross margins climbed from 30.2% to 38.6%. The gross value of goods (GMV) increased 86% to $ 352 million.

An underestimated aspect of the quarterly results was the expansion of existing partners. In my opinion, this is similar to Net Income Withholding (NRR). Luxury brand LVMH (LVMHF), consumer electronics brand Sennheiser, Spanish footwear brand Camper and luxury jewelry brand Boucheron have all broadened the scope of their current partnerships. GLBE has also established a footprint in Australia through a partnership with Australia Post. Speaking of net income retention rates, Global-E enjoys an NRR in the order of 140%, among the highest I’ve seen in the industry.

The company has completed the first phase of rolling out the new native integration with major Shopify-based merchants. The original pilot merchants are online and are now selling through the plug-in. Management has increased the revenue forecast for the full year from a range of $ 227 million to $ 231 million to $ 239 million to $ 241 million. Additionally, a GMV of $ 1.41 to $ 1.42 billion is now projected from the previously forecast amount of $ 1.35 to $ 1.37 billion.

The stock has taken off over the past week, so it’s a tough pursuit right now as it is meeting resistance in the $ 64- $ 68 range. If we go over $ 67, I think we’ll see a push into the $ 75 to $ 77 range. A big plus point here is that the stock is on the 50 day Simple Moving Average (SMA). We still have several hours left today, so the stock must remain at this level. A close of less than 50 days can mean we are several days away from consolidation, which can actually be positive for a longer view. Secondary indicators are still on the rise, but not in overbought territory. Again another bright spot but something we need to watch out for.

Of course, GLBE holds an aggressive law-based assessment here at this time. While some see a risk of big names moving logistics in-house, JD.com (JD) has managed to rise to the top in China by focusing on logistics in the e-commerce space because others don’t. did not want it. I see GLBE following the same footsteps. In the short term I expect volatility, but in the longer term I see GLBE as a high risk, high return name with the reward outweighing the risk.

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