Why Shopify-backed Global-E online stock plunged before gaining ground on Tuesday

What happened

Shares of Global-E online (NASDAQ: GLBE) first crashed on Tuesday, plunging as much as 18.5%. However, as of 12:45 p.m. ET, the stock was back in positive territory, up 6.3%.

The catalyst that smuggled the cross-border e-commerce specialist was its quarterly financial results, which were somewhat mixed – but the devil is in the details.

So what

Global-E Online generated revenue of $76.3 million in the first quarter, up 65% year-over-year, driven by gross merchandise volume (GMV) which jumped 71%. Unfortunately, the increase in income did little to contribute to the deterioration of the results. The company reported a net loss of $53.6 million, resulting in a loss per share of $0.35.

Image source: Getty Images.

To put those numbers into context, consensus analyst estimates called for revenue of $75.1 million and a loss per share of $0.13.

Mixed numbers aside, there were plenty of reasons to be bullish on Global-E. The company has launched partnerships with a number of leading consumer companies, including a shoemaker Adidas and clothing icons Brooks Brothers and Ralph Lauren.

Also, the e-commerce platform Shopify (NYSE: SHOP) has a strategic partnership with Global-E Online, which has made it the exclusive cross-border service provider for the software-as-a-service (SaaS) provider’s 1.7 million merchants. Additionally, Shopify currently owns over 14.4 million shares of Global-E Online, a 9% stake valued at approximately $287 million.

Now what

During the conference call to discuss the results, co-founder and CEO Amir Schlachet said Global-E Online discontinued service to Russia during the quarter, which represents approximately 2% of the company’s GMV. Additionally, it reported a significant reduction in sales in several Central and Eastern European markets, accounting for around 4% to 5% of its GMV.

Faced with these obvious headwinds, Global-E has reduced its forecast for the full year. The company now expects revenue of $393 million in the middle of its forecast (from $416 million previously), which would still represent growth of around 60%.

Given the reason for the mixed results and lower forecast, investors recovered from the initial knee-jerk reaction and concluded that Global-E Online stock was still a buy.

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Danny Vena holds positions at Global-e Online Ltd. and Shopify and has the following options: January 2023 Long Calls at $1,140 on Shopify and January 2023 Long Calls at $1,160 on Shopify. The Motley Fool holds positions and recommends Global-e Online Ltd. and Shopify. The Motley Fool recommends the following options: $1140 January 2023 Long Calls on Shopify and $1160 January 2023 Short Calls on Shopify. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

James T. Quintero