Global-E Online: E-Commerce Growth Story At A Critical Technical Spot Ahead Of Earnings

Thomas Barwick

The Server & Enterprise Software industry has had its struggles this year. Hawkish central banks around the world have helped send interest rates higher, pressuring these high-duration equities. One company ranks best in its group for revenue per employee. That solid sales growth should help Global-e Online (NASDAQ:GLBE) weather inevitable tough times to come as consumers become more strapped.

GLBE: Best In Show For Revs/Employee, Running Lean

GLBE: Best In Show For Revs/Employee

BofA Global Research

According to Bank of America Global Research, Global-e Online (GLBE) was founded in 2013 by Amir Schlachet, Shahar Tamari, and Nir Debbi. The company employs 350+ people, as of 2020. Its products are designed to help D2C retail companies facilitate cross-border transactions to over 200+ markets, accepting 100+ currencies, and 150+ payment options.

The Israel-based $4.1 billion market cap Internet & Direct Marketing Retail industry company within the Consumer Discretionary sector does not have positive trailing 12-month GAAP earnings and does not pay a dividend, according to The Wall Street Journal. Importantly ahead of earnings Wednesday night, the stock has an elevated 11.4% short interest.

The company has upside potential from a strong cross-border e-commerce business that could shake up the industry. It has differentiation through its Gross Merchandise Value (GMV) platform. There are risks, though. For one thing, earnings comparables are going to be tough hurdles in the next few quarters. Year-on-year earnings declines are in the cards and could grow deeper should a global recession strike. Ongoing supply chain challenges, while improving, could be problematic. It is also critical that Global-e Online renews its key partnership with Shopify.

On valuation, analysts at BofA see continued operating losses through 2024. The Bloomberg consensus forecast actually shows a small per-share profit in 2022 before less negative bottom-line numbers compared with BofA’s outlook. The stock trades at a very high EV/EBITDA given negative earnings, but I like how the company is free cash flow positive – and that yield is expected to grow modestly. While GLBE has a D valuation rating by Seeking Alpha, it also sports a strong A+ growth rating.

GLBE: Earnings, Valuation, Free Cash Flow Forecasts

GLBE: Earnings, Valuation, Free Cash Flow Forecasts

BofA Global Research

Looking ahead, corporate event data provided by Wall Street Horizon show a confirmed Q3 2022 earnings date of Wednesday, November 16, after the closing bell, with a conference call immediately after results hit the tape. You can listen live here. The action does not stop there, however. Global-e Online’s management team is expected to speak at the Raymond James Technology Investors Conference from December 57 in New York. Volatility can hit when industry or company-specific news breaks at such events.

Corporate Event Calendar

Corporate Event Calendar

Wall Street Horizon

The Options Angle

Digging into the earnings picture, data from Option Research & Technology Services (ORATS) show a consensus Q3 earnings estimate of -$0.30 which would be a decline from $0.01 of per-share profits in the same quarter a year ago. There has been a single upward EPS revision of the stock since it last reported in August.

ORATS also shows an implied earnings-related stock price swing of 17.4% after earnings cross the wires. Thus, traders should consider just a small position size to this volatile company since the nearest-expiring at-the-money straddle is priced for a massive swing in the stock price. Shares have traded higher post-earnings in the last three quarters.

GLBE: A Massive Expected Stock Price Change Post-Earnings

GLBE: A Massive Expected Stock Price Change Post-Earnings

ORATS

The Technical Take

Since I last reported on GLBE, shares have indeed moved higher considerably. Let’s look at the chart with fresh eyes. I see a confluence of resistance here around $26. Notice how the 50-day moving average, 200-day moving average, and a downtrend resistance line all come into play at the current price. Importantly, however, the stock held its May low on a test of the mid-teens earlier this month. I’d like to see the stock rise above $28 to help confirm a breakout. If it does that, then I see next resistance near $38. While I think it will make that move, it is a hold on technicals right now.

GLBE: A Confluence of Resistance After A Succesful Retest

GLBE: A Confluence of Resistance After A Succesful Retest

Stockcharts.com

The Bottom Line

The growth story with GLBE is intact, but risks weigh ahead of what will surely be a tough year for the global e-commerce industry. Moreover, the stock might encounter trouble at the moment. I have a near-term hold rating with a bullish long-term view on the firm’s strong platform and business.