E-commerce can quickly become a headache for retailers.
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Between sourcing suppliers, keeping inventory in warehouses, and directing deliveries, there are many pain points for anyone looking to sell to a finicky public. Giga cloud technology (GCT) wants to change that. And GCT stock is plummeting.
Since emerging from dollar status in early December, the stock has more than tripled. GigaCloud stock also receives top ratings across the board from Investor's Business Daily.
The company aims to eliminate middlemen when it comes to supplying and fulfilling online shopping orders. CEO Larry Wu told IBD that this is a business-to-business sector and business is doing well.
“We've had very good numbers the last few quarters,” he said. “Our business model is not that easy because we are the ones who stand behind the scenes. We don't interact much with consumers, so people don't know about us, but I We ship thousands of large and bulky items every day.”
GCT stock: a roller coaster for investors
Although GigaCloud has decades of experience, it only started working in this particular e-commerce space in 2019, Wu said. The company began trading on the Nasdaq in August 2022, but its stock price bottomed out below $5 three months later. They've been on a roller coaster ever since.
GCT stock currently ranks #1 on the IBD 50 Elite Growth Stocks list.
Adjusted earnings soared by a four-digit percentage in the September quarter to 59 cents per share. That beat analysts' expectations of 38 cents a share, according to FactSet. Sales also exceeded expectations at $178.2 million, an increase of more than 39% year-on-year.
Gigacloud is expected to show strong performance in the fourth quarter as well. The company has not yet scheduled an earnings release, but GCT stock analysts expect earnings to nearly double (up 87%) to 58 cents per share. Additionally, sales are expected to increase by 78.5% to $224.2 million.
These strong metrics are reflected in the rating of GigaCloud stock. The stock's ideal earnings per share valuation is 99. This means GigaCloud ranks in the top 1% of all stocks in terms of recent profitability. GCT stock also has the highest overall rating of 99, a measure of technical and fundamental performance.
Supplier-enabled retail
However, it is certainly difficult to pinpoint Gigacloud's e-commerce business. CEO Wu says he can't think of any other business that does exactly what GigaCloud does.
GigaCloud is the cornerstone of the supplier fulfillment retail model. This means that GigaCloud streamlines transactions between suppliers, resellers, and end customers. GigaCloud's model essentially eliminates the need for warehouses to store inventory.
Keeping inventory on hand can be a difficult proposition for retailers and resellers, Wu says. GigaCloud is often involved in high-value transactions such as furniture, electronics, and sporting goods.
Retailers often stock small quantities of each item in their warehouses. However, an incorrect estimate can reduce the retailer's profits.
“If we always do business in the traditional way, where retailers can manage their inventory, there will be a lot of surplus and waste in their inventory,” Wu said. “Essentially, no one commits inventory to any channel until a consumer actually makes a purchase.”
This way of operating will benefit the entire e-commerce ecosystem, he says.
The supply chain behind GCT inventory
In addition to managing fulfillment, GigaCloud also helps customers source supplies.
“It's more reliable,” he said. “We have these metrics that show us the past performance of that supplier. It's much better than sitting down and talking to that potential supplier for 15 minutes at a trade show and making a decision. We're also reducing inventory risk. There's no need to worry.” ”
Everything looks good. The problem, however, is that GCT's stock price remains volatile. Wu admits that introducing GigaCloud to investors was an uphill battle. The company is behind many transactions. As of September 30th, there were 741 active sellers. However, GigaCloud does not interact with end customers.
GigaCloud stock has a Relative Strength Rating of 99, which means it ranks in the top 1% of all stocks based on twelve-month performance. Institutional investors own 6% of Gigacloud shares. So interest is growing and growing.
According to MarketSmith.com, the stock broke above the cup base in August with a buy point of 11.78. Then, in less than a month, his stock price fell by more than 25%. That triggered the sell rule. Smart investors are advised to cut their losses if the stock price falls 7% to 8% below the entry price. Since then, GCT stock has soared.
Investors are noticing the benefits
Wu says investors and, importantly, customers are starting to get to know the company better.
He said GigaCloud has a very traditional approach, using the Internet to improve traditional business. In this case, it is the improvement of supply chain and fulfillment logistics through e-commerce. The company is still in the early stages of developing the wholesale market.
“You don't have to worry about inventory risk or fulfillment costs. We offer flat rate shipping to 48 states in the U.S.,” he said. “So, you don't have to worry about anything. Just focus on selling the product to the consumer. Once we know where to sell this product, that order will automatically be fulfilled directly to the consumer. Don't worry. You don’t have to.’ Whatever. ”
Follow Alison Gatlin on Platform X, formerly known as Twitter. @IBD_AGatlin.
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