Global-E Online IPO — should you invest in the cross-border e-commerce company?
Global-E Online IPO — The Israeli e-commerce platform is going public at an expected valuation of $3.6b. This Shopify-backed company aims to remove the complications that arise when moving goods cross-border.
Global-E Online IPO: Challenges in e-commerce
COVID, globalization, and a focus on selling direct-to-consumers created a surge in cross-border e-commerce volume — with the industry growing 17% in 2023 to reach $736b in global sales. In a 2019 report by Visa:
- 87% of companies saw cross-border expansion as their biggest growth driver.
- 51% of companies said they needed help optimizing international sales.
But selling cross-border isn’t as simple as selling domestically:
- Merchants must deal with remittances, fraud risks, and foreign exchange risks, among others.
- Consumers face language barriers, high currency conversion costs, and import duties.
Making international e-commerce easy
Global-E Online provides solutions to these problems with its platform targeted towards e-commerce brands, handling local taxes and duties, shipping, multiple languages, etc. Merchants are responding, as can be seen by their:
- Growing sales: $136.4m sales in 2020 — up 107% from 2019.
- Increasing profitability: $7.9m net income in 2020 — from a loss of $7.5m in 2019.
Hold up… The numbers seem impressive except its 32% gross margin in 2020 is lower than traditional software companies’ of upwards to 70-90%. Meanwhile, its IPO price is comparatively more expensive (valuation-wise).
The Joe’s Take: While $GLBE is positioning itself for a foothold in an attractive industry, reporting strong numbers, and even profitability, we’re waiting for a cheaper price.
Israel, the “Startup Nation”
Israel is churning out tech companies like no tomorrow with the most startups per capita in the world, many of which are now becoming public. In 2020, 27 Israeli companies went public, a 4x increase from 2019 and the most since 2007.
Global-E Online will join the 90+ Israel-based companies currently trading or on their way to trading on the US stock exchange, such as Fiverr ($FVRR), WIX ($WIX), and Monday.com (potential IPO coming in 2021).
See also: Squarespace, the e-commerce giant prepares to go public via direct listing