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Global-e Online shares fall below the IPO price and find support

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Global-e Online Ltd. (NASDAQ:GLBE) is a $3 billion internet and direct marketing retail company in the consumer discretionary industry. According to Fidelity Investments, the company and its subsidiaries “provide a platform to enable and accelerate direct-to-consumer cross-border e-commerce Israel, UK, United States and International. The platform allows international buyers to shop online and merchants to sell to and from worldwide. Global-e Online Ltd. was founded in 2013 and is headquartered in Petah Tikva, Israel.”

The stock has had a wild ride since its IPO last year. The IPO price of $25 was a launch pad for a surge to above $83 last September after trading just 13 months ago, according to Nasdaq.com. The stock has a full round trip…and then some. Shares are currently trading below $20 but may have found a bottom. I’ll detail that later.

Basically, GLBE shows negative earnings per share with a view to the next year and 2024. The company doesn’t pay a dividend and its free cash flow yield is paltry. Additionally, the company’s enterprise value to EBITDA ratio is currently sky-high at around 70x, although analysts at Bank of America Global Research expect it to decline over the next two years.

Global-e earnings estimates and valuation

Global-e earnings estimates and valuation

BofA Global Research

As a result, Global-e is expanding its US presence. BofA notes that the company acquired Borderfree, a subsidiary of Pitney Bowes, for $100 million in cash. This is the second major acquisition of 2022 — Global-e bought Flow Commerce in January for $500 million. Amidst these acquisitions, execution risks are high. Nevertheless, based on an EV/gross multiple valuation, BofA sets a price target of $30 for its shares. Among other things, they cite risks from the deals, tough pandemic competition and ongoing problems in the supply chain.

The stock recently reported a loss of $0.35 per share in its Q1 2022 earnings report, below analyst expectations of -$0.056, according to First Call Consensus.

Global e Research Highlights: Earnings Miss

Global e Research Highlights: Earnings Miss

Loyal Investments

Looking ahead, the company’s calendar of events is a bit thin for GLBE. A technology conference was scheduled for later this month, but after doing some research I found that Jefferies had pushed that event back to September. So keep an eye out for potential market-moving news at this event three months from now. The next earnings date is unconfirmed for August 16 AMC, according to data provider Wall Street Horizon.

Corporate Events: Q2 Earnings Date & Jefferies Conference

Corporate Events: Q2 Earnings Date & Jefferies Conference

Wall Street Horizon

The technical recording

Turning to the charts, which is what I specialize in, it doesn’t take words to say how bad the story was. The drop from the 2021 peak is more than 75%. What makes the drop even harder is that it has traded in a range of around $50 to over $80 for most of the second half of last year. There are many so-called “dead bodies” in this area. This is hard long-term resistance.

In the near term, however, I see a tradable bottom. There is support in the $15.87-$16.80 range. This area, which has been tested three times since early May, continues to hold. I would love to see GLBE break above $24 to confirm this low – also keep in mind that the psychologically important IPO price is just above it. If we break above the mid-$20s, a longer-term target to the previous base range in the top-$40s could be in play.

GLBE since its IPO: zone of support with resistance levels

GLBE since its IPO: zone of support with resistance levels

Aktiencharts.com

The final result

GLBE is another sad IPO story of 2021. Free cash flow is weak and valuation is still expensive. It’s not all doom and gloom, however. I see support on the chart. The bulls may be gaining momentum just below the IPO price. A swing long trade here with a stop below the May low makes sense to me.

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