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Should you buy GigaCloud Technology stock? (May 2024)

Published first at https://www.3minutebreakdowns.com GigaCloud stock analysis. Ticker: $GCT GigaCloud Technologies operates a marketplace for the drop shipping of large merchandise like furniture and fitness equipment. Buyers list their products on ecommerce websites like Rakuten, Amazon, Walmart or Wayfair. Once a sale takes place, they order the product on Gigacloud who then ships it direct to the customer from one of its many warehouses. And based on latest figures GigaCloud looks like one of the best stocks in the market. Revenue over the last 12 months has grown 64% to 827 million and more than tripled since 2020. Net income is positive at 105 million and free cash flow has grown to 120 million. So with a market cap of 1.45 billion and enterprise value of 1.25 billion the company is trading at under 14 times earnings and only 10 times free cash flow. That valuation is incredibly cheap considering the company’s growth. Since 2021, active third-party sellers have increased 126% and the average spend per buyer has jumped to almost $160,000. Dropshipping large merchandise helps brands with inventory risk and takes the pressure of their supply chains. Meanwhile GigaCloud’s decision to lease warehouses, instead of owning them outright, means the company already reports high returns on capital. Those returns should improve as GigaCloud grows and net income margins of 13% can expand further as well. So the big question is why the stock is so cheap? A short report published last year by Culper Research highlights some of the risks. Notably, the majority of GigaClouds operations reside in China which makes the company unattractive to many investors and the company was late to file its 10-k annual report. The bookrunner for GigaCloud’s IPO, Aegis Capital, also has a poor reputation while Culper Research claimed that GigaClouds warehouses are simply not busy enough for a company of its size. #stocks #investing #stockmarket #3mb