Why Global-e Online should be your next eCommerce stock pick

Global-e Online NASDAQ: GLBE succeeds because it offers three things sellers need in one place: e-commerce, direct-to-consumer access, and international expansion. E-commerce is ingrained in our lives and is a requirement for every business today. International expansion, especially cross-border transactions, is a key avenue for businesses to leverage because it exponentially expands the market that any company can reach. Direct-to-consumer business models are a new trend in retail, eliminating intermediaries in favor of higher-margin businesses.

To put the company and its platform into perspective, consider that the brands covered by its services include Ralph Lauren NYSE:RL, Disney NYSE:DIS AND Netflix NASDAQ:NFLX. Disney and Netflix are two digital powerhouses using this service. They use it because of its simplicity and the speed with which new markets are opening up for retailers. The most important services provided include localized advertising and payment platforms that enable businesses and consumers to speak the same language and use the same currencies.

Global-e had a solid quarter; Guides Above

Globa-e Online had a solid first quarter, growing revenue 24% to $145.9 million. The upper limit was 300 basis points above the consensus, leading to an increase in the guidance. Business was supported by growth in service fees and fulfillment services, which led to wider adjusted margins. Gross merchandise volume, a leading performance indicator, increased 32%, setting a new record thanks to the addition of new brands and the introduction of new markets.

The margin news is good. The company recorded another GAAP loss, but it was better than expected and quarterly losses are decreasing. The GAAP loss of $0.19 is a few cents above the consensus and puts the company on track to achieve profitability above forecasts. Adjusted EBITDA increased by 50% year over year and is positive.

Leadership is another strength. The company published guidance for the second quarter and increased guidance for the full year. Both are strong relative to the analyst consensus published by Marketbeat, and the full-year outlook is likely to be raised again. New brands and markets are being launched regularly and the partnership with Shopify is going well. Shopify Markets Pro connects both platforms, allowing Global-e to handle all cross-border transactions.

Global-e Analysts LIft Targets

Analyst activity after the publication of the first quarter is mixed. Nevertheless, the net result is optimistic for the market – two companies maintain their ratings and price targets, two increase their price targets, and one increases its share prices. The conclusion is that eleven analysts rate this stock as a Moderate Buy and lead the market outperform. The consensus target was flat over the last quarter, but is now slightly higher, up 20% year-over-year. The consensus target is for a 43% upside at $43, and many recent targets, including two post-release corrections, are above that level.

Post-release price action is also mixed. Shares rose at the time of initial publication, but reached resistance at critical levels and are now heading lower. The critical levels coincide with the main moving averages and suggest that despite analyst enthusiasm, price pressure may continue. There is a floor at $28.50 that could protect the market from falling further, but there are also risks. In this scenario, a move below $28.50 could take the market to the mid-low $20 levels.

One factor that suggests a move below $28.50 is unlikely is institutional activity. A broad representation of institutions have been buying these shares on the balance sheet for three quarters in a row. They own 95% of the shares and their shares are growing. A return to the lowest level in a year would be a good time to buy more. The stock also has a relatively high 10% short interest rate, so covering a short position can quickly come into play. Again, the critical line is near $28.50. If the market confirms support, the short seller can close out their positions and help the rally cover the short position.

Before you consider Global-E Online, you’ll want to hear this.

Every day, MarketBeat tracks Wall Street’s top-rated and best-performing analysts and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts are quietly whispering to their clients to buy now, before the broader market embraces them… and Global-E Online wasn’t on the list.

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