Answering a caller’s query about GigaCloud Technology Inc. (NASDAQ:GCT) during the lightning round on October 7, Mad Money host Jim Cramer commented:
I actually met these guys. I mean, I got to tell you, this thing is such a rocket ship. This is one of the most speculative stocks on earth. If you want speculation, I say GigaCloud.
Cramer’s meeting with management had also come up in April, when he admitted that GigaCloud had slipped through his follow-up. His description of the shares then struck a different note from today’s warning about speculation.
GCT ranks fifth on our list of 10 Best Performing New Tech Stocks to Buy Right Now. See which four tech stocks outrank GCT.
Marketplace Growth Is Translating Into Profits
GigaCloud Technology Inc. operates a business-to-business platform that combines merchandise sourcing, payments and logistics for large products such as furniture. Second-quarter revenue increased 27.6% year over year to $411.6 million, while net income rose 22.3% to $42.3 million. Diluted earnings per share reached $1.16, and gross margin expanded to 25.6% from 23.9%.
The marketplace’s expansion extends beyond the headline revenue figures. Over the twelve months ended June 30, active buyers increased 17.1% to 12,823, while third-party merchandise volume grew 27% to $962.3 million. Those sellers accounted for 55.2% of marketplace volume, showing that outside businesses are making greater use of GigaCloud’s infrastructure. The company also replaced its previous buyback authorization with a new $120 million, three-year program in August. GigaCloud is also pursuing growth through established retail platforms. Its inclusion among the best-performing new tech stocks highlighted a European collaboration that offers another route for its suppliers to reach customers.
Despite Cramer’s description of the stock as speculative, its earnings valuation is relatively modest. Data show GigaCloud trading at approximately 10.9x forward earnings, compared with 31.3x for Wayfair. The comparison offers context rather than a direct equivalence. GigaCloud serves business customers, whereas Wayfair primarily sells to consumers. Nevertheless, GigaCloud’s lower multiple accompanies an already profitable operation.
Trade Disruptions Could Complicate the Expansion
GigaCloud Technology Inc.’s cross-border business leaves it exposed to changes in tariffs, customs enforcement and shipping conditions. Its second-quarter filing reported longer customs-clearance times and disruptions at certain U.S. ports. Associated costs had not been material, but the company noted that tighter enforcement could increase logistics and compliance expenses or affect product availability. These risks reach beyond the company’s own expenses. Higher import costs can make merchandise less attractive to buyers, while delivery delays can interfere with retailers’ purchasing plans. The company also cautioned that trade restrictions could weaken consumer demand and delay retailer purchases. A low earnings multiple offers less protection if those pressures start reducing profits.
Management’s third-quarter revenue forecast of $375 million to $400 million was below the second-quarter total. That does not establish a lasting slowdown, but investors should avoid assuming that the latest quarterly sales level will rise uninterrupted. The combination of growth and a modest multiple had already placed GigaCloud among low-priced growth stocks. That coverage identified a turnaround within the business that helped explain a sharp increase in one analyst’s price target.
More Hedge Funds Bought In, but Skepticism Remains
According to Insider Monkey’s database, 24 hedge funds held GigaCloud Technology Inc. in Q2, compared with 20 in Q1. Despite reducing its position by 49% in Q2, Arrowstreet Capital was the company’s largest hedge fund holder with 316,507 shares. Short interest stood at 15.12% of the public float. The increase in fund holders suggests broader institutional participation, while the sizable short position shows that the bullish view remains contested.
GigaCloud does have profits and an expanding marketplace to support the story, and its valuation is less demanding than his description might suggest. It is important to see whether the company can preserve that growth as moving merchandise across borders becomes more complicated.
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