GigaCloud Technology Inc. GCT has been on a downward spiral lately, with significant selling pressure. The stock has dipped 38.2% compared with the 48.8% increase of its industry and the 9.1% growth of the Zacks S&P 500 composite.

Image Source: Zacks Investment Research

While the six-month performance paints a dull picture, the year-to-date performance is crucial for a fuller understanding. GCT’s stock has surged 20.7% this year, suggesting that the current downward movement is part of a correction phase. Close competitors like Revolve Group RVLV have seen a 93% rise, while Beyond BYON has suffered an 82% decline over the same period.

With GCT’s recent correction, many investors may be contemplating whether now is the opportune moment to buy the stock. Let’s delve deeper to assess this potential.

GCT’s B2B Marketplace Growth

GCT integrates its supplier-fulfilled retailing business model with research and development aimed at harnessing advanced algorithms to further refine its strong cloud infrastructure. This strategic fusion enables the company to provide a superior B2B selling and sourcing experience for all involved in the marketplace.

Addressing the rising demand for large parcel merchandise, GCT has witnessed notable growth in GigaCloud Marketplace GMV, sales volume, and the number of buyers and sellers. Sales surged 70.2% year over year in the third quarter of 2024. GMV increased 80.2% in the quarter. The number of active buyers and Active 3P sellers surged 85.5% and 41.8%, respectively, year over year.

GCT remains committed to expanding its B2B marketplace in terms of both buyers and sellers. The company has launched a service called Branding-as-a-Service (BaaS) to help sellers enhance their product competitiveness within the GigaCloud marketplace. By expanding its supplier base to include products from Colombia, Mexico and Turkey, GCT has increased its product diversity, allowing buyers to source a broader range of quality products from these new markets. Furthermore, the company has expanded its global fulfillment network to meet the rising demand for its marketplace, thereby enhancing support for both buyers and sellers.

GCT’s Robust Liquidity Position

GCT’s liquidity remains strong, with a current ratio of 2.13 at the end of the third quarter of 2024 compared with the industry average of 2.16. A current ratio above 1 indicates that the company is well-positioned to meet its obligations. GCT’s strong liquidity position provides it with the financial flexibility to pursue growth opportunities and weather potential market fluctuations.

Image Source: Zacks Investment Research

GCT’s Sales and EPS Growth Prospects Strong

The consensus mark for GCT’s 2024 sales stands at $1.16 billion, suggesting year-over-year growth of 64.1%. Sales are expected to increase 14.3% in 2025. The consensus estimate for the bottom line is pegged at 3.1 cents per share, indicating 34.8% year-over-year growth. Earnings are expected to increase 9.2% in 2025.

Image Source: Zacks Investment Research

GCT is a Buy

Despite GCT's recent dip, its strong year-to-date performance and the current correction phase present a strategic buying opportunity. The company's robust growth in its B2B marketplace highlights its capacity to meet rising demand. Innovations like BaaS and global expansion enhance product diversity and competitiveness.

GCT's solid liquidity position provides resilience, while healthy projections for sales EPS in 2024 and 2025 demonstrate strong fundamentals. With competitors showing mixed performance, GCT's unique market offerings position it as a compelling investment. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Revolve Group, Inc. (RVLV) : Free Stock Analysis Report

GigaCloud Technology Inc. (GCT) : Free Stock Analysis Report

Beyond, Inc. (BYON) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research