Global-E Online's Nascent Cross-Border Ecommerce Stage Creates Ample Scope For Growth, Analyst Says

  • Raymond James analyst Brian Peterson reiterated Outperform on Global-E Online Ltd GLBE.
  • Peterson re-rated after hosting meetings with co-founder and CEO Amir Schlachet and co-founder and President Nir Debbi, where the analyst dove into the company's key growth initiatives. 
  • Peterson came away from the meetings with an increased appreciation of GLBE's competitive differentiation, as it enables higher conversion rates and simplifies complexity for merchants and consumers. 
  • Given the nascent stage of cross-border e-commerce, Peterson thinks this creates ample headroom in growth both from new customers and expansion with the company's ~1k merchant base. 
  • While the analyst understands investor pushback on valuation and near-term macro risks, several key long-term growth opportunities will take time to materialize and are likely outside CY23 and CY24 valuation metrics. 
  • Global-e continues to progress in its partnership with Shopify Inc SHOP, as Shopify Markets Pro runs for a small set of merchants. 
  • The company will continue to work with Shopify to improve integration and conversion, with expectations for merchant ramps in 2023 and a more material GMV contribution in 2024.
  • GLBE believes it can further expand its already impressive conversion rates by leveraging shoppers on the BorderFree platform, creating additional future marketing and analytics opportunities. 
  • GLBE will look to migrate merchants over to the GLBE platform over time, and the analyst saw more significant revenue synergies in 2023.
  • Global-e mentioned its duty drawback product as an incremental opportunity to drive improving results for merchants. 
  • As this product gets deployed across multiple geographies, Peterson believes GLBE will have an incremental opportunity to save money for merchants, which should help new customer acquisition and provide a potential uplift on take rates.
  • While margins took a step back in 2022, given its M&A efforts, the analyst expects operating expense growth to lag revenue growth in the future. 
  • With management guiding to adjusted EBITDA margins of ~11% for 2022, Peterson thinks an EBITDA margin profile in the teens looks reasonably achievable in the near-to-intermediate term.
  • Given the nascent nature of the cross-border opportunity and GLBE's increasing competitive differentiation, the analyst believes shares represent one of the most open-ended growth stories in his coverage universe.
  • Price Action: GLBE shares traded lower by 0.20% at $20.12 on the last check Monday.
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