Waiting for Global-E Online to Deliver
With half of its workforce located in Israel, GLBE stock has lost 24% since the onset of the Hamas war, but investors could be overreacting and missing the e-commerce player's true global nature
By Robert Lakin
The e-commerce platform fell short of analysts’ Q3 revenue forecast as Europe and luxury brands showed slower growth
While still in the early stages, a collaboration with Shopify could be a game changer
Analysts trimmed their targets, but no one is changing their ratings, with most telling clients to overweight GLBE stock
The Nasdaq-traded shares of Global-E Online (GLBE) got thrashed last Wednesday, falling more than 24% after cutting its full-year revenue forecasts alongside of its third-quarter financials.
The cross-border e-commerce firm reported a Q3 net loss of 20 cents per diluted share, narrowing from a loss of 41 cents in the year-earlier period and against a consensus 23 cents a share loss.
Revenue for the quarter ended Sept. 30 was $133.6 million, up from $105.6 million a year earlier but short of analysts’ forecast $141 million.
Source: Koyfin
That 5% miss was attributed on the Nov. 15 earnings call to softer European consumer demand and weaker luxury fashion demand. In fact, management noted on the earnings call that some 80% of its luxury brand clients saw slower same-store growth in the quarter. They said that Europe represents 30% of GLBE’s inbound sales, while luxury represents 25% of the company’s gross merchandise value.
For the full year 2023, Global-E Online said it now expects revenue in the range of $563 million to $571 million, down from its prior range of $570 million to $596 million.
Analysts were quick to adjust their targets but no one changed their positive opinions on the GLBE stock.
Still Advising Investors Buy
Analysts from Benchmark to Goldman Sachs continue to believe the shares are worth accumulating. Benchmark cut its 12-18 month price target to $40 a share from $50 but kept its Buy rating. They previously had the highest target and made the sharpest cut.
Source: Koyfin
Goldman also kept the Buy rating but cut its target price to $36 a share from $48 citing lower confidence in growth and a tough macro environment. Raymond James took its target to $41 from $45 while maintaining its Outperform.
Others included Keybanc, to $40 from $42, with Overweight rating; UBS, to $45 from $50, with a Buy rating; and, Morgan Stanley, to $33 From $41, maintaining its Equalweight rating.
Still Outpacing Benchmarks
Global-E Online stock has had a good ride so far in 2023. At Friday’s $30.52 Nasdaq close, it’s up more than 47% for the year to date and has bested all four of the Israel exchange-traded funds that we follow, including the pair holding the shares, Ark Israel Innovative Technology ETF (IZRL) [2.22% weight] and iShares Msci Israel ETF (EIS) [2.15%].
In fact, GLBE stock’s performance has even outpaced its biggest ETF holder, ARK Fintech Innovation (ARKK), where it holds a 3.8% weighting, at #10 of 31 holdings.
Big Name Collaborations Show Promise
Global-E highlighted on the earnings call its collaborations with two hot e-commerce names, fellow Israeli outfit Wix.Com (WIX) and Shopify (SHOP). While still too early to see the impact of the collaborations, they point to some smart moves by GLBE management.
Shopify launched its Markets Pro service in September, enabling merchants to create a localized international consumer experience across all markets sans the complexities of international duties and taxes compliance, international payment fraud and international shipping worries. International orders on those merchants’ sites need to be delivered, and Global-E seems ready to step up.
Since the launch, Global-E has started to see what CFO Ofer Koren on the earnings call, described as “really nice adoption to date with thousands of merchants that actually activated the solution, and we do accept it to give us an additional acceleration into 2024 onwards.”
Wix is enabling merchant customers using the website creation platform to expand their e-commerce offerings, which could contribute to Global-E’s servicing of those merchants. A plug-in for Wix-based merchants is in the pilot phase, with at least one customer.
CEO Amir Schlachet compared that relationship with Global-E’s Salesforce collaboration, but was clear that Shopify was where management was expecting more incremental growth.
What Numbers Say
At Friday’s close, the GLBE stock within range of the $30 oversold threshold, for those who watch a stock’s 14-day relative strength index. The 200-day moving average is 34.84.
The shares are trading at 9.5x trailing 12-month sales and at 5.5x book value. For comparison, the price-to-sales and price-to-book value multiples for SHOP stock are 13.14 and 10.59, respectively. And, dare I make the comparison, for Amazon (AMZN), those multiples are 2.72 and 8.2, respectively.
The stock had a near 93% run in the first nine months of 2023. However, the shares are down almost 24% since the terrorist attacks of Oct. 7. As an Israeli-domiciled company, it wouldn’t be surprising to see some impact of the on-going war with Hamas.
Earlier this month, Israel’s Finance Ministry said that its assumptions about the impact of the war on the country’s economy including some 350,000 Israelis drafted as military reservists returning to work soon.
The company mentioned on the earnings call that half of its workforce is located in Israel, but was clear that despite some employees called up for active reserve duty, Global-E has seen no impact on ongoing activities and business continues to operate as usual.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. None of the above should be construed as investment or financial advice. Investing is inherently risky. Please perform your own due diligence.
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