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Shopify Takes $193 Million Pre-IPO Stake in Partner Global-E

While it may not be a household name, Global-E Online (NASDAQ: GLBE) is indispensable for cross-border e-commerce around the globe. The company takes on many of the challenges encountered with international selling, including foreign languages, currency exchange, inter-country regulatory compliance, customs and duties, and local payment methods. This removes many of the roadblocks and speed bumps that are part of international online retail.

Global-E Online is scheduled to begin trading on the Nasdaq Stock Exchange sometime next week, using the ticker "GLBE," though the final date has yet to be confirmed. The company is planning to offer 15 million shares, priced in a range of $23 to $25 per share. The underwriters will have the option to sell an additional 2.25 million shares, depending on market demand.

Image source: Getty Images.

The company has an arrangement with Shopify (NYSE: SHOP), which has taken a keen interest in the company. In the wake of its initial IPO filing last month, Shopify bought 7.75 million shares in the company, acquiring a 6.5% stake, and establishing a significant service and partnership agreement with Global-E, making the company the exclusive provider of cross-border services for Shopify's customers. After the IPO, that stake will slip to 5.4%, but Shopify also acquired warrants that entitle it to an additional 11.85 million shares over the coming two years, which could bring the value of Shopify's stake to nearly $500 million if the current pricing holds.

For the year ended Dec. 31, 2020, Global-E produced revenue of $136.3 million, up 107% year over year, accelerating from 70% gains in 2019. The company also achieved the scale necessary to generate profits, with net income of $3.9 million, improved from a loss of $7.5 million in 2019. Its net dollar retention rate shines, remaining above 134% since 2018, climbing to an impressive 172% in 2020.

Given those impressive metrics and the obvious synergies, it's no wonder Shopify jumped aboard before the IPO.

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Danny Vena owns shares of Shopify and has the following options: long January 2023 $1,140 calls on Shopify and long January 2023 $1,160 calls on Shopify. The Motley Fool owns shares of and recommends Shopify. The Motley Fool has a disclosure policy.


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