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Global-e: Occupying A Substantial Niche In The E-Commerce Firmament

Oct. 02, 2021 7:28 AM ETGlobal-e Online Ltd. (GLBE)SHOP, SHOP:CA46 Comments
Bert Hochfeld profile picture
Bert Hochfeld


  • Global-e is the leading vendor in a market segment called cross-border e-commerce.
  • It offers merchants and brands the ability to address international e-commerce opportunities through what is called the D2C ( Direct to Consumer) paradigm.
  • The company has achieved exceptional growth, and has recently been increasing its revenues by near triple digit rates.
  • The company has achieved a marginal level of profitability and free cash flow.
  • The company has an excellent competitive position and it partners with Shopify as that company's chosen vendor in this space.
Boxes On Conveyor Belt

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Global-e - How some on-line merchants go global

These days there are any number of e-commerce platforms. They range from Amazon (AMZN), the behemoth in the space, and still sprightly enough to achieve substantial growth, to Shopify (

This article was written by

Bert Hochfeld profile picture
Bert Hochfeld graduated with a degree in economics from the University of Pennsylvania and received an MBA from Harvard. Mr. Hochfeld has enjoyed a long career in the tech world, working for IBM, Memorex/Telex, Raytheon Data Systems, and BMC Software. Starting in the 1990s, Mr. Hochfeld worked as a sell-side analyst and won awards from the Wall Street Journal for his coverage of the software space. In 2001, Mr. Hochfeld formed his own independent research company, Hochfeld Independent Research Group, which provided research services to major institutions including Fidelity, Columbia Asset, SAC Capital, and many other prominent institutions and hedge funds. He also operated the Hepplewhite Fund, a hedge fund that specialized in technology investments. Hedge Fund Research, an independent 3rd party firm that specializes in ranking managers, rated the Hepplewhite Fund as the best performing small-cap fund for the 5 years ending in 2011. In 2012, Mr. Hochfeld was convicted of misappropriating funds from a hedge fund he operated. Mr. Hochfeld has published more than 500 articles on Seeking Alpha, all dealing with companies in the information technology space. Highly esteemed for his investment wisdom accumulated over decades, Mr. Hochfeld ranks in the top 0.1% of Tip Ranks analysts for his selection of information technology stocks and their subsequent successes.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of GLBE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (46)

Bert Hochfeld profile picture
At this point I doubt that I can shed light and not create heat. The outlook for Global-E hasn't changed. Indeed, with the acquisition the company recently consummated, it has gotten better. As to rudeness and belligerence, I will leave the audience to decide. I do try to be polite in responding to substantive queries/comments. I still am happy to provide that level of discourse. But of course that is not what was in play.
Should I apologize for my recommendation. Short answer no! I am an analyst. I will continue to make recommendations based on the disciplines that I use. We are in the midst of a panic and a massive rerating. I have recently written my views on that subject. Realistically, Global-E the stock won't get better until this panic abates. But forecasting sentiment, which is not logically derived is a fraught undertaking. And I make no forecast whatsoever as to the denouement of the current imbroglio in the Ukraine, and what impact that might or has had on share valuations. But I will keep following Global-E and continue to expect the company will achieve strong growth and a path to strong free cash flow margins.
What do we think would be a good price to add to GLBE
SkiTheGoodStuff profile picture
Looking forward to seeing the trend Monday (lockup expires) & Tuesday. Question for those with IPO trading experience: Is this typically a good long-term buying opportunity if investors respond favorably to the newly-expanded float just after lockup expires?
@SkiTheGoodStuff i'm in the same boat. nibbled a bit yesterday... but still worried about dumping by insiders in the coming weeks.
Pillpoppinpuppy profile picture
@demic yeah - three insiders (Vitruvian, Red Dot and Goor) reported in mid September that they sold 8.5 MM shares. The bad news is that they have 54 MM shares left!
@Pillpoppinpuppy scary stuff, yet excited by the potential. trying to be disciplined, waiting for $45 before nibbling more, chart looks yucks.
I also think the 58% cagr is conservative. GLBE has yet to see the revenue kick it will get from the Shopify alliance, US market isnt even their #1 yet, and asia basically just got started and now they have a Japan office. My take on global-e here www.israelstockinvestor.com/...
@jguy2 Hey, I just read your analysis of GLBE. Interesting stuff. Thanks for sharing the link.
Pillpoppinpuppy profile picture
Interesting article about competition in cross-border payments. It doesn't mention GLBE but touches on competitive activities that could slow GLBE's growth:

@Pillpoppinpuppy If you look at estimates for cross border ecommerce GLBE has a huge tam. www.alltheresearch.com/...

Example just by looking at this one. Not sure if GLBE take rate remains the same or not. If take rate remains constant there total addressable market could be a whopping 370 billion in 2026 estimate(Obviously less if you take out certain businesses). I have doubts about how successful cross border will go in terms of TAM, but nevertheless I think it is a huge market. I think the world needs it as well.
@Pillpoppinpuppy this is about payments if anything it's a positive as is anything that makes global commerce easier. Globale works with paypal alipay visa master amex wepay...this will just be another alternative on the globale vendor websites.
Buy the dip. This one is a long term winner.
Bert Hochfeld profile picture
There is certainly competition. But so far as I can determine, GLBE is unique in having a platform that encompasses everything one needs to do to set up a D2C model for cross-border e commerce. They are not going to get the same margins as SHOP. To a certain extent, the margins they have are indicative of strong opex discipline. And I don't know all of the details of the SHOP agreement-what the take rate will be for those merchants. The company will be likely to improve its operational processes at scale. This is still a very small company-back when SHOP was only transacting $1 billion of GMV it had much different margins than it does these days. But overall, SHOP has and will have a greater software mix and that will always yield higher margins than aggregating and reselling shipping. I would point out that last quarter, the take-rate did actually rise a bit-that is somewhat dependent on mix on a quarter to quarter basis.
@Bert Hochfeld
Regard the "take-rate did actually rise a bit.."

Fulfillment revenue were positively affected by increased post-Brexit clearance fees. Due to the new rules related to cross border e-commerce VAT in the EU, which came into force on July 1st, we expect a decrease in both clearance fees revenues and costs, resulting in a slight reduction in take rate, but with an insignificant effect on gross profit going forward.
06 Oct. 2021
Nice article, Bert. Given the high competition do you think GLBE has the ability to increase their take rate and as result the service gross margins? The larger fulfillment business has only a 13% gross margin and is the larger part of the revenue mix. SHOP with which it is often compared to always had 50%+ margins overall likely due to its dominant status.
Bert Hochfeld profile picture
You can believe any earnings estimates you wish. Having been an analyst for many years, I am simply relating to you how it is. Essentially all so-called earnings estimates are within a small bound of company guidance. Analysts do not make up their own estimates-that is simply not part of the paradigm. And they have to develop reasonable working relationships with CFO and IR Directors. They would be severely chastised if their estimates were not closely aligned with guidance. Companies have strong incentives to provide estimates that they feel confident in beating. No CFO is going to provide an estimate that encompasses much in the way of risk since the consequences of missing an estimate are so dire. In these days of SaaS revenue models it has become exceedingly rare for companies to miss headline revenues and EPS numbers since most of their revenues are established on multi-year contracts. But they can and do miss or mis-estimate bookings numbers at a fairly significant rate.
GLBE is not really quite a SaaS company in that more than half of its revenues are derived from a take rate against GMV. But most of the estimate that this company calls guidance consists of already in-place arrangements that are generating GMV. I suggest you read the conference call transcript and in particular the part where the CFO describes his guidance setting paradigm. If you read that, and consider the comment about high double digit growth, it should be apparent why I do not use consensus estimates which are no more and no less than guidance numbers. I suggest if you did that you would probably find I was a bit conservative in my estimates, as I intended to be.
Bert Hochfeld profile picture
Last time. The income statement shows profitability the way I count for the latest reported quarter. If you use consensus numbers in your evaluation, you will be seriously mislead. As it happens, I own, and have owned Upstart, Affirm, and Asana. Now, go back 6 months and look at consensus forecasts for these companies. Now look at estimates. What do you see. At the start of the fiscal year, Crowdstrike estimated it would have 50% growth. Fast forward 6 months-because of 2 quarters of greater than forecast growth, the estimate for this year is 60% growth. and sitting here, Tuesday morning, I believe that the number will wind up to be 67%.
As to Global-E-it is a recent IPO and doesn't have a lengthy track record. But using the FactSet consensus, or any other consensus to determine what actual earnings and revenues might be simply produces wildly inaccurate results. Right now, the consensus revenue forecast for GLB-E for the quarter that ended last week is for $55 million in revenues, and for EPS of $.01. I was at pains in the article to point out just how unlikely such a result might be.
Finally, just look at the Yahoo Finance consensus for 2022. It shows an EPS estimate of $.20. Now I doubt that such a number is within hailing distance of reality. But there it is.
Again, as I was pains to point out in the article, GLBE management wants to set a bogey of 70% growth in order to have margin to beat investor expectations. There "forecast" does not imply that they believe that the most likely number is the one they present as guidance. Indeed, as I pointed out in the article, the CFO went through the construction of the so-called forecast. If you read the transcript, you will readily see why the number is biased low.
Pillpoppinpuppy profile picture
@Bert Hochfeld Thanks. I look forward to following GLBE. They have a compelling service but the valuation makes the shares speculative.

I suspect FactSet and Bloomberg estimates are more vetted and better quality than Yahoo Finance estimates. I used both of the former before commenting about the $82.7 million loss expected for 2022. You want us to believe only you and that is fine.
Bert Hochfeld profile picture
Please get your facts right. SBC for the quarter in question was about $1.6 million. Amortization of the Shopify warrant was $25 million. If you don't get your facts right, how can you possibly reach a reasonable conclusion. If you really believe that guidance should be considered a forecast-then do some work and see just how that works out.
If you want to discuss the business of Global-E, its competitors and its prospects that is great. But to present misinformation and dubious FactSet consensus just wastes lots of electrons.
Pillpoppinpuppy profile picture
@Bert Hochfeld The consensus estimate for operating income for year ending December '22: -$82.7 million. That is: MINUS $82.7 MM. Go ahead and add back the SHOP warrant amortization. That still won't come close to a profit. You can go ahead with your ad hominem attack all you want. I simply am questioning your comment that they are profitable, since the analyst consensus indicates that they are not.
Bert Hochfeld profile picture

I would strong suggest that no one seriously take any estimates from FactSet consensus seriously. Analysts typically have a hard time in dealing with real estimates for hyper-growth companies. I was quite explicit in the article that I expected guidance and estimates to show material changes. I still feel that way.
As it happens, if you but look at the income statement, you will see the company is actually profitable even excluding the impact of stock based comp which was very small. I took pains to point out that the GAAP loss was a function of the non-cash charge for the amortization of the warrant expense. Again, as I wrote in the article, I already use a share count as if the warrants and convertible preferred were exercised and fully converted so it is proper and reasonable to remove the amortization expense. I might add parenthetically, that whether or not you agree with the convention, if you want to invest in the IT space, you will find almost all businesses report non-GAAP earnings. Dubious or not, that ship has long since sailed-today, many companies do report "implied shares," and when that data is available I use it as well to account for SBC.
Pillpoppinpuppy profile picture
@Bert Hochfeld You have the right to do your analysis the way you want. Payment for services using cash or stock are both an expense, regardless of all the games played on Wall Street and in corporate America. I can assure you that nobody who acquires companies excludes stock compensation expense from their valuation of the business. Companies continue reporting that way knowing full well it is an expense. It reminds me of Biden's spending bill that is "paid for" -- both fabrications are written out of whole cloth.

I looked at projected results, which are based on management guidance, and they showed unprofitability if you assume stock compensation is an expense.
Can anyone suggest another service like SA?
@Tony Khan I find listening to Motley fool's Brian Feroldi and Brian Stoffel excellent on Youtube! While I don't agree with all of there trades. They are more or less looking for quality through a specific things. They have a lot of content and help you as a trader go through the process with examples to teach. IMO Motley fool is the best(Not necessarily all the writers). The reason being is there history. I gather just surround yourself with people who can find good companies. If you want to learn about value investing listen to Jeremy Financial Education, but he is also a great growth trader as well!
@rwinkel Much Obliged Sir, Thank you!
javings profile picture
Thanks BH. Have GLBE on my radar now. May start a small position, and then add, depending on market opportunities.
Pillpoppinpuppy profile picture
GLBE isn't expected to report earnings through at least 2023, according to FactSet. I know that you said in your fourth bullet that they are "marginally profitable" but I believe that assumes that stock compensation isn't an expense the way cash compensation is. My two cents.
Bert Hochfeld profile picture
Adbrothers-you have misread the income statement. They spent $5 million on sales and marketing. The other amount is the amortization of the Shopify warrants. They certainly didn't "spend" money on sales and marketing. Since I use 140 million outstanding shares, that accounts for all the shares that are owned by or could be owned by SHOP. They spend too little money on S&M, in my view although they certainly get a huge return. They are not a typical software company. There gross margins are a combination of service revenue, which is software and logistics, where they arrange for fulfillment services on the part of their clients. Looking at gross margins and comparing them to other software companies makes no sense.
adbrothers profile picture
I don't know Bert. I like the growth but the Gross Margins are abysmal. They spent over 30 million last quarter in Sales and Marketing, General and Administrative was less than 5 million. But that is a good thing. They are looking to build up their sales team. So about 1.5 years or 2 years before the sales team matures enough to really take off? Thanks of the article
markone profile picture
Thank you for the insightful write-up.
Short-term, the lock-up period expiring November 8 (as per MarketBeat) may yield a favorable entry. Then again, your above referenced 9/10/21 issuance of a secondary 15.6M shares will have muted that possibility.
Thanks for the article. I like GLBE and hold a big position in it. I also like dLocal (DLO), which is a competitor.

Bert, a couple company topic article requests:

Upstart (UPST) - you did an article on this company in April at $100 and now recently surged past $300. Can you do a follow up article on it now that it went parabolic?

Nextdoor (KVSB) - hyperlocal neighborhood app that has former Square venture investor Khosla and ex-CEO Sarah Friar involved as well as the backing of Cathie Wood and Dan Loeb.
Appanage profile picture
@Xenogenetic TickerTarget is @Bert Hochfeld membership based investment service where he delivers update for $UPST and other names both new and previously covered by him. It’s well worth every penny and then some because that’s were you get all his ideas first.
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