Missed Out on Shopify Stock? Buy Global-e Stock Instead.

Shopify has become one of the largest e-commerce companies in the world. It provides the backbone for millions of small merchants, and it's pivoting to capture market share from enterprise businesses.

But if you're looking for a smaller player that's just getting started, you might want to consider buying Global-e Online (NASDAQ: GLBE) stock. It's growing fast, and it also gives you exposure to Shopify. Here's how.

A niche e-commerce player

Global-e is an e-commerce company you might not know about because it doesn't sell products to end users. Like Shopify, it provides software-as-a-service solutions for business clients. It works with small businesses, but its bread and butter are large companies that rely on its products for cross-border commerce.

Clients plug its platform into their websites, and Global-e's platform instantly gives customers the ability to buy internationally, with localized checkout, 100 currency options, instant customs calculations, and other services that make it easy to press the buy button. It also provides data to clients that helps them understand regional preferences and take the right steps to capture market share.

Global-e has a constant stream of new, high-profile customers that see the benefits of offering worldwide shipping, and it has a myriad of client testimonials about increased revenue after signing up. Some examples are Fold, which increased international sales 109% after working with Global-e, and Anastasia Beverly Hills, which grew international sales 90%.

It works with more than 1,000 brands, including Alo Yoga, Allsaints, and Kim Kardashian's Skims, and it added Heydude by Crocs and Donna Karan in 2024's first quarter, in addition to many others. Management said that it has dozens of new clients going live or in the pipeline.

Revenue increased 24% year over year in the first quarter, and gross merchandise volume was up 32%. Global-e still isn't profitable, but it's improving. Adjusted gross margin expanded from 41.4% to 45.3% in the first quarter, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased from $14.5 million last year to $21.3 million this year.

Growth has decelerated as overall retail is still reeling from high inflation. Whenever interest rates go down, it should benefit from higher spending.

Shopify's confidence and backing

Shopify was an early investor in Global-e and still has warrants to buy more stock. Global-e amortizes these warrants quarterly, which is taking a toll on its financial statements. But whatever remains will be fully amortized by the end of 2025, and as gross margin expands and the company scales efficiently, it could become profitable quickly.

Shopify also partners with Global-e and offers its platform to its merchant base. It recently launched Shopify Markets Pro, which is essentially a white-label packaging of Global-e's solutions. Management expects this to lead to higher sales, and so far, it updated investors that the rollout is going well.

Global-e also recently announced a similar partnership with website maker Wix.com to provide cross-border services for its e-commerce clients.

Global-e stock is down, but it won't stay there

Global-e stock had a massive run-up last year, but it's cooled off in 2024 and is down 7% year to date. Growth is slowing, the company is still not profitable, and inflation is a big bump along its journey. Wall Street analysts still expect losses through at least next year.

Even at the current price, I wouldn't call it cheap; Global-e stock trades at a price-to-sales ratio of 10. However, because it's such a small company with so much potential, it gets a premium valuation.

Global-e stock may continue to experience some bumps until interest rates go down and it becomes profitable, but if you can handle some volatility and have an appetite for risk, it could be a great candidate for a growth stock.

Jennifer Saibil has positions in Global-E Online. The Motley Fool has positions in and recommends Global-E Online, Shopify, and Wix.com. The Motley Fool recommends Crocs. The Motley Fool has a disclosure policy .