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Friday, July 19, 2024

GigaCloud Technology prices IPO at $12.25 to raise $36M, debuts today


GigaCloud Technology Inc, a pioneer of global end-to-end B2B ecommerce solutions for large parcel merchandise, debuted on the Nasdaq Global Market under the ticker symbol “GCT” on Thursday, August 18th.

The company raised $36 million by offering 2.94 million shares at a price of $12.25. In addition, GigaCloud has granted its underwriter, Aegis Capital Corp., a 45-day option to purchase additional shares of Class A ordinary shares of up to 15% of the number of shares.

Leveraging its “GigaCloud Marketplace” B2B ecommerce platform, GCT integrates everything from discovery, payments and logistics tools into one easy-to-use platform. The global marketplace seamlessly connects manufacturers, primarily in Asia, with resellers, primarily in the U.S., Asia and Europe, to execute cross-border transactions with confidence, speed and efficiency.

GigaCloud offers a comprehensive solution that transports products from the manufacturer’s warehouse to end customers, all at one fixed price. The company first launched the marketplace in January 2019 by focusing on the global furniture market and has since expanded into additional categories such as home appliances and fitness equipment.

 “We are here to revolutionize how manufacturers and retailers connect by eliminating wholesalers,” Stated GigaCloud management teams as they are confident with the business. “We believe there is tremendous potential with our business model, and once our customers realize what we are offering.”

Actually, their confidence is backed by the company’s significant growth over the last three years. According to its SEC files, in 2019, 2020 and 2021, GigaCloud generated total revenues of $122.3 million, $275.5 million, and $414.2 million, respectively, representing 125.3% and 50.4% year-over-year growth in 2020 and 2021. Meanwhile, the company generated net income of $2.9 million, $37.5 million, and $29.3 million over the past three years, respectively.

While many companies suffered from COVID-19, the pandemic initially positively impacted GigaCloud’s business as resellers had a sudden increase in demand for products. The company’s  business model requires sellers to ship and hold their inventory in the country they intend to sell instead of waiting for containers to arrive from overseas once a sale has been made. The demand led to a dramatic uptick in its business for 2020.

However, in the second half of 2021 and early this year, the industry experienced supply chain constraints from Asia, including Malaysia, China, and Vietnam. This led to an intense rise in ocean freight charges, going from $2000 to $20,000, and it started to affect GigaCloud’s business. On the one hand, the increased product prices were offset by the rise in costs; On the other, the 3P sellers became more hesitant to ship their products overseas due to the fear of sending products at the peak of the container costs.

Inflation and other disruptions have continued to challenge supply chains. Over the past earnings season, many companies lowered their guidance due to rising fuel and labor costs brought on by “unprecedented” levels of inflation. Nevertheless, with the container costs decreasing back to $6,500 – $7,000 and new ships continually being built, GigaCloud still has an optimistic view of supply chain issues and the company’s cost control.


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