Flexport is on a mission to make global trade easier. The company has taken a technology-driven approach to global logistics. Its software is disrupting the freight forwarding industry -- companies that help facilitate international trade.
Flexport aims to usher the freight forwarding industry into the 21st century by replacing old-school methods of doing business (phones, fax machines, and physical paper) with automation. The company believes its innovative approach should make it faster and cheaper for its clients to ship their products around the world.
It has a bold goal to eventually become a very profitable company and a darling of Wall Street, so many investors are eagerly awaiting its initial public offering (IPO). Here's a look at what you need to know about Flexport and how to potentially buy its stock before its IPO.
IPO
Is Flexport publicly traded?
Is Flexport publicly traded?
Flexport isn't a publicly traded company as of mid-2024. Several leading venture capital funds own the logistics platform. The privately held company also counted e-commerce enabler Shopify (SHOP 1.76%) as one of its largest investors.
When will it IPO?
When will Flexport IPO?
Flexport didn't have an IPO on the calendar as of mid-2024. The company's current focus is on returning to profitability, which it aims to achieve by the end of 2024 or early 2025. Once it reaches sustainable profitability, it will likely pursue an IPO so that the venture capital funds holding its shares can begin exiting their investments.
How to buy
How to buy Flexport stock
Because Flexport hasn't completed an IPO, investors can't buy shares of the supply chain company in their brokerage account. However, accredited investors (i.e., high-net-worth individuals or those with high incomes) can sometimes buy pre-IPO shares of companies like Flexport on secondary platforms, such as EquityZen or Forge Global (FRGE 3.12%).
Accredited investors who really want to get in ahead of its IPO should check out those platforms to see whether they have shares of Flexport available to buy. Non-accredited investors will need to continue waiting until the company launches its IPO.
In the meantime, people interested in the supply chain trend could consider investing in a publicly traded company focused on capitalizing on the same markets Flexport serves. Here are three options to consider.
1. Shopify
Shopify is a leading global commerce company that provides essential internet infrastructure to its customers. It used to operate a rival logistics platform, Shopify Logistics. However, it sold that business, including Deliverr, to Flexport in early 2023. In exchange, Shopify received a 13% equity stake in Flexport.
It also had an existing equity interest in the global logistics platform. It has continued to add to its investment in Flexport, pouring another $260 million into the company in early 2024. Shopify provides investors a backdoor to gain equity exposure to Flexport. It could eventually distribute its Flexport stock to shareholders after that company completes its IPO.
2. UPS
UPS (UPS 2.47%) is a leading global logistics company. It specializes in ground delivery, with more than 100,000 delivery trucks. UPS also has a meaningful air fleet with almost 300 planes, significantly larger than Flexport's fleet of three planes.
The other big difference between UPS and Flexport is that Flexport makes most of its money on ocean freight shipping. It buys space on container ships in bulk and leases the space to its customers, making money on the spread between the shipping line's prices and what it charges customers.
3. FedEx
FedEx (FDX -0.05%) is very similar to UPS. The main difference is that FedEx specializes in global air express freight. It had more than double the number of aircraft compared to UPS, with almost 700 planes.
It also has a larger international presence, allowing it to charge cheaper rates than rivals seeking to ship internationally. International air cargo is a focus for Flexport, which is working to improve the profitability of its planes.
Investors who want to buy one of these Flexport alternatives can purchase shares in any brokerage account. Here's a step-by-step guide on how to invest in stocks like Flexport.
Step 1: Open a brokerage account
You'll have to open and fund a brokerage account before buying shares of any company. If you still need to open one, here are some of the
. Take your time to research brokers to find the best one for you.
Step 2: Figure out your budget
Before making your first trade, you'll need to determine a budget for how much money you want to invest. A good rule of thumb is that you shouldn't invest money you might need over the next three to five years, like your emergency fund. You'll then want to decide how to allocate that money. The Motley Fool investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years.
However, you don't have to get there on the first day. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks and then grow from there.
Step 3: Do your research
It's essential to thoroughly research a company before buying its shares. You should learn about how it makes money, its competitors, its balance sheet, and other factors to make sure you have a solid grasp on whether the company can grow value for its shareholders over the long term.
Step 4: Place an order
Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:
- The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
- The stock ticker (SHOP for Shopify, UPS for UPS, and FDX for FedEx).
- Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order because it guarantees you buy shares immediately at that market price.
Once you complete the order page, click to submit your trade and become a shareholder in a publicly traded company benefitting from the same growth trends as Flexport.
Investors would follow a similar process to buy an IPO stock like Flexport when it goes public. Once shares become available, select Flexport's chosen stock ticker to buy shares through your brokerage account.
Profitability
Is Flexport profitable?
As a private company, Flexport doesn't need to disclose its financial results to the public. So, there wasn't much publicly available information about its profitability as of mid-2024.
However, a Wall Street Journal article in late 2023 provided a glimpse into the company's financial situation. At the time, Flexport wasn't profitable. However, founder and CEO Ryan Petersen told the Journal that Flexport "expects to get back to profitability by the end of next year or early 2025." Meanwhile, an article by The Information in late 2023 highlighted that Flexport's goals for 2024 were to triple its revenue (to around $300 million) while slashing costs to get on track with its profitability goals.
The logistics company has taken several steps to boost its profitability. It cut its annual operating expenses by 25%, partly driven by a roughly 20% reduction in its workforce.
The company's long-term goal is to become a "profitable public company that throws off lots of cash that can be a darling of Wall Street," according to Petersen. It needs to return to profitability, go public, and increase its cash flow to achieve its vision.
Should I invest?
Should I invest in Flexport?
Since it's not public, most people can't invest in Flexport yet. However, the company plans to go public eventually, possibly as early as 2025. That gives you some time to research the company before buying shares.
Research is an important step. It could increase your conviction that the company will be a great investment. You could also discover something in your research that changes your mind about investing in the company. With that in mind, here are some reasons why you might want to invest in Flexport when it goes public:
- You like the company's technology-driven approach to the logistics sector.
- You prefer to invest in founder-led companies.
- You believe Flexport will be successful in its aim to become a profitable and cash-flowing company.
- You like its acquisition of Shopify's logistics business, which will increase its scale and growth potential.
On the other hand, here are some reasons you might decide not to invest in Flexport's IPO:
- You don't know what Flexport does or how it makes money.
- You're concerned about its management, given the comments of its former CEO, who publicly called out the company's reporting. The former Amazon (AMZN 0.73%) executive was handpicked by Peterson but stayed with the company for less than a year.
- Given the cyclical nature of the global logistics industry, you're not sure Flexport will reach its ambitious goal of being highly profitable.
- You don't think it can disrupt the global freight forwarding industry.
ETF options
ETFs with exposure to Flexport
Since Flexport is still a privately held company, investors can't passively invest in its stock through an exchange-traded fund (ETF).
Exchange-Traded Fund (ETF)
However, people interested in investing in the logistics sector have a couple of ETF options to consider, including:
- The ProShares Supply Chain Logistics ETF (SUPL -5.09%) focuses on leading logistics companies in shipping, railroad, air, and trucking. It owned shares of about 40 companies in mid-2024, including top-holding FedEx and top 10-holding UPS. The fund had a 0.58% ETF expense ratio.
- The Pacer Industrials and Logistics ETF (SHPP 0.54%) focuses on companies providing transportation, logistics, hardware/robotics, software, or ancillary services supporting global supply chains. The fund held more than 100 stocks as of mid-2024, including UPS and FedEx in the top 10. The ETF had a 0.6% expense ratio.
Related investing topics
The bottom line on Flexport
Flexport is using technology to disrupt the freight forwarding industry. The company believes its approach will enable it to grow into an industry leader and become very profitable, allowing it to create a lot of value for shareholders in the future. This upside potential has investors eagerly anticipating its eventual IPO.
FAQ
Investing in Flexport FAQ
Can I invest in Flexport?
Accredited investors (i.e., those with high incomes or a high net worth) can potentially invest in Flexport ahead of its IPO. Online platforms like Forge Global and Equity Zen enable accredited investors to buy shares in pre-IPO companies like Flexport. Non-accredited investors must wait until the company's IPO to buy shares.
Is Flexport a publicly traded stock?
Flexport wasn't a publicly traded stock as of mid-2024. It remained a privately held company, owned by several venture capital funds and other investors, including Shopify.
Is Flexport going to IPO?
Flexport hadn't yet set a date for its IPO as of mid-2024. However, the company plans to go public eventually. It is working to get back to profitability, which it hopes to achieve by the end of 2024 or early 2025. It will likely wait until it's back in the black before going public.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Matthew DiLallo has positions in Amazon, FedEx, and Shopify. The Motley Fool has positions in and recommends Amazon, FedEx, Old Dominion Freight Line, Shopify, and Union Pacific. The Motley Fool recommends United Parcel Service. The Motley Fool has a disclosure policy.
