This B2B E-Commerce Stock is Up 65% – Can It Go on Delivering?

This little-known company provides AI-powered logistics solutions as well as a B2B marketplace for big and bulky merchandise.

Key Takeaways

• GigaCloud’s stock has risen 65.06% over the past 12 months as it reports robust revenue growth and profitability;

• Despite being a relatively unknown name, the company is growing its presence in the B2B e-commerce space thanks to its AI-powered logistics solutions;

• Management are on the lookout for M&A opportunities that can help the business to expand, particularly in Europe;

• The stock might look undervalued compared to Alibaba and Amazon, based on forecast earnings.

1. GigaCloud’s Wild Ride

GigaCloud Technology [GCT] is a California-headquartered e-commerce company founded in 2006.

Its main business is operating a business-to-business (B2B) platform that connects sellers of bulky items — such as furniture, electrical appliances and gym equipment — to resellers and retailers around the world.

Until February 2021, GigaCloud was known as Oriental Standard Human Resources Holdings and was based in Beijing, which has caused some confusion about whether it is a Chinese company.[1] In GigaCloud’s own words (taken from its IPO prospectus), it is best described as a “holding company incorporated in the Cayman Islands and not a direct Chinese or Hong Kong operating company”.^[2]

GigaCloud went public on August 18, 2022 at $12.25, but immediately got caught up in meme stock mania^[3] and shot to an all-time high of $62 within a couple of days. It then plunged just as quickly and was trading below $10 by early October of that year.

The fact that it instantly became a meme name, coupled with the uncertainty around its links to China and what the company actually does, means GigaCloud has attracted its fair share of unwanted attention, including a short-seller report from Grizzly Research in May this year that accused it of inflating key metrics.^[4] This has made the stock susceptible to a short squeeze and volatile swings.

As of December 6, GigaCloud’s share price is $22.20. It is up 21.31% year-to-date and up 65.06% in the past 12 months, but down 30.58% in the past six months.

For comparison, the ProShares Online Retail ETF [ONLN] — which has allocated GigaCloud 3.62% of its portfolio^[5] — has gained 31.48%, 42.19% and 16.87% in the respective three periods.

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