Missed Shopify stock? Buy Global-e stock instead.

Online shop has become one of the largest e-commerce companies in the world. It is the backbone for millions of small sellers and is changing direction to take market share from enterprises.

However, if you are looking for a smaller player just starting out, you may want to consider buying Global-e Online (GLBE -3.07%) stock. It’s growing fast and it’s also giving you exposure on Shopify. Here’s how.

Niche e-commerce player

Global-e is an e-commerce company you might not know about because it doesn’t sell products to end users. Like Shopify, it offers software-as-a-service solutions for business customers. It works with small businesses, but its bread and butter is large companies that rely on its products for cross-border trade.

Customers connect the platform to their websites, and Global-e immediately gives customers the ability to buy internationally, with payment localization, 100s of currency options, instant customs calculations, and other services that make it easy to hit the buy button. It also provides customers with data that helps them understand regional preferences and take the right steps to gain market share.

Global-e has a steady stream of new, high-profile customers who see the benefits of offering worldwide shipping, as well as a ton of customer testimonials of increased revenue after signing up. Some examples include Fold, which increased international sales by 109% after partnering with Global-e, and Anastasia Beverly Hills, which increased international sales by 90%.

He works with over 1,000 brands, including Alo Yoga, Allsaints and Skims Kim Kardashian, and also added Heydude by Crocodiles and Donna Karan in the first quarter of 2024, among many others. Management said it has dozens of new clients that are live or in the works.

Revenue rose 24% year over year in the first quarter, and gross merchandise volume rose 32%. Global-e is still not profitable, but it is improving. Adjusted gross margin rose from 41.4% to 45.3% in the first quarter, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose from $14.5 million last year to $21.3 million this year.

Growth has slowed as the retail sector as a whole continues to feel the effects of high inflation. Whenever interest rates fall, that should bring benefits in the form of higher spending.

Confidence and support from Shopify

Shopify was an early investor in Global-e and still has the rights to buy more shares. Global-e amortizes those rights quarterly, which is reflected in its financial statements. However, anything that remains will be fully amortized by the end of 2025, and as gross margins improve and the company scales effectively, it could quickly become profitable.

Shopify also partners with Global-e and offers its platform to its merchant base. It recently launched Shopify Markets Pro, which is essentially a white label wrapper of Global-e’s solutions. Management expects this to lead to higher sales and has told investors so far that the rollout is going well.

Global-e also recently announced a similar partnership with website builder Wix to provide cross-border services to e-commerce customers.

Global-e shares are falling, but they won’t stay at that level

Global-e shares had a huge run last year but have cooled off in 2024, down 7% year to date. Growth is slowing, the company is still not profitable and inflation is a big drag on its path. Wall Street analysts still expect losses through at least next year.

Even at its current price, I wouldn’t call it cheap; Global-e shares trade at a price-to-sales ratio of 10. However, because it’s such a small company with such big potential, it gets a higher valuation.

Global-e stock could continue to see some declines until interest rates fall and the company becomes profitable, but if you can handle the volatility and are willing to take some risk, it could be a great candidate for a growth stock.

Jennifer Saibil holds positions at Global-E Online. The Motley Fool holds positions at and recommends Global-E Online, Shopify, and Wix.com. The Motley Fool recommends Crocs. The Motley Fool has a disclosure policy.