Ayush Bansal
Image: Global-e
The cross-border e-commerce solutions provider, Global-e Online (GLBE) has been bearish since the second half of 2021, continuing its downfall in 2022 to a decline of nearly 70% year to date.
The latest blow to the stock came after its latest earnings which despite a beat on revenue had the 2022 outlook slashed due to the ongoing geopolitical instability and war on Ukraine.
Consequently, the stock fell to new lows of $13.80 a share in the after-hours on May 16, plunging by a huge 28.05%. This decline followed a downtrend of 6.26% in the prior session which had the stock trading at $19.18 per share.
Consequently, GLBE stock prices plummeted 26.28% to $14.14 in pre-market trading on May 17.
Q1 2022 Financial Results
Revenue in the first quarter of 2022 was $76.3 million, an increase of 65% year over year, of which service fees revenue was $31.9 million and fulfillment services revenue was $44.4 million.
Moreover, the GMV shot up by 71% YOY to $455 million while it saw an increase of 66% in the previous quarter (Q4 2021).
The non-GAAP gross profit surged by 94% YOY and gross margin by 580 basis points. Thus, the gross profit was $29.9 million while the gross margin stood at 39.1% in Q1 2022.
Non-GAAP gross profit2 in the first quarter of 2022 was $29.9 million, an increase of 94% year over year. GAAP gross profit in the first quarter of 2022 was $27.2 million.
Non-GAAP gross margin2 in the first quarter of 2022 was 39.1%, an increase of 580 basis points from 33.3% in the first quarter of 2021. GAAP gross margin in the first quarter of 2022 was 35.6%.
Adjusted EBITDA3 in the first quarter of 2022 was $3.3 million compared to $5.2 million in the first quarter of 2021.
Net loss in the first quarter of 2022 was $53.6 million.
Outlook
Due to general uncertainties and instability in the broader market as a result of the geopolitical situation as the war on Ukraine continues, GLBE provided a rather bleak outlook for Q2 and reduced full-year guidance.
The company anticipates revenue of $82.5-$84.5 million for the current quarter, while analysts anticipate $90.26 million. Furthermore, the GMV is expected to be $495-$505 million, with an adjusted EBITDA of $2.8-$3.8 million.
For the full year, revenue was reduced from $411-$421 million to $383-$403 million, compared to the consensus of $412.79 million. The GMV for 2022 is expected to be $2.28-$2.49 billion, with an adjusted EBITDA of $38-$42 million.
Risk
The continued decline of GLBE since last year can be attributed to the Nasdaq Composite index’s overall downtrend since its all-time highs in November 2021, while small-cap stocks like GLBE face greater volatility.
Furthermore, the company’s previous peak valuation of 50 times sales was a factor in its decline to a more realistic 15 times sales.
The Russian invasion of Ukraine has also been a major factor, causing numerous headwinds. In 2021, the company’s 23 percent revenue came from the European Union, which has now been impacted by the war and will continue to be so as the invasion has no end in sight.
If the war continues, Europe will most likely suffer, and economic activity will suffer as a result, hurting the company. The company’s recent guidance cut is also due to the Russia-Ukraine conflict and its effects on the global economy.
With peaking inflation and rising interest rates, the threat of a recession is becoming more real by the day. Equities and cryptocurrency have both plummeted. This could mean that GLBE continues to fall in the short term as economic and geopolitical instability worsens.