This Recent IPO Stock Could Produce 3X Returns in 5 Years

Despite recent volatility, the S&P 500 is up 30% over the past year, and companies looking to take advantage of that environment are going public at record rates. Through the first three quarters of 2021, the market has seen 1,635 initial public offerings (IPOs) raise a total of $331 billion.

In general, I exercise caution when considering recent IPO stocks. That’s because I prefer to see a few quarters’ worth of financial data before making a decision. That being said, if I’m particularly interested in a company, I may open a small position early on. For instance, Global-E Online (NASDAQ:GLBE) went public in May 2021, and it’s at the top of my watchlist.

Here’s why I think this recent IPO stock could grow threefold in the next five years.

Image source: Getty Images.

Big market opportunity

Domestic e-commerce is fairly straightforward. Merchants are typically familiar with the local language, currency, and consumer preferences, and they don’t have to worry about international regulations. However, cross-border e-commerce is much more complicated, as merchants need to overcome a variety of barriers, and the problem only becomes more daunting with each new geography.

Global-E aims to simplify things. Its platform integrates with a merchant’s online storefront, localizing the language, pricing, and payment methods to create a better experience for international buyers. The company also helps merchants navigate regulatory complexities like customs duties, and it provides shipping services, after-sale customer support, and returns management, making its platform an end-to-end solution for cross-border e-commerce.

More importantly, Global-E delivers on its mission. Its platform helps merchants boost international conversion rates and revenue (often by more than 60%) in over 200 destination markets. And that scale gives the company an advantage, allowing it to collect troves of consumer data from hundreds of different geographies. Global-E then leans on artificial intelligence to make sense of that information, surfacing relevant insights for merchants on a market-by-market basis. 

This creates a flywheel effect: As Global-E powers more e-commerce stores, the company collects more data. This makes its AI models more intelligent, enhancing its ability to optimize content for international buyers. This virtuous cycle should be a powerful growth driver in the coming years.

Why does that matter? Forrester Research believes cross-border e-commerce will be a $736 billion market by 2023. That puts Global-E in front of a massive opportunity.

Strong execution

Not surprisingly, Global-E’s value proposition is resonating with modern businesses. The company already has 522 merchants on its platform, up 18% through the first half of 2021. And since 2018, its gross retention rate has typically been above 98%, meaning less than 2% of clients churn each year. Over the same period, its net retention rate has typically…