3 Green Flags for Fiverr’s Future

Fiverr International (FVRR -6.31%) After a few difficult years, I got back on my feet. Shares of online freelancing service Wrangler are up 53% from multi-year lows hit in November, but are not yet fully recovered. Fiverr’s stock price is still more than 90% below the all-time high it reached in early 2021.

The company faces several challenges, and sales growth is not the same as during the lockdown phase of the pandemic when the gig economy was at its peak. However, I have seen some useful market trends and improving metrics for Fiverr, which raise green signals for Fiverr’s future.

1. Fiverr’s revenue hasn’t stopped growing.

Many investors were quick to abandon gig economy champions like Fiverr after the first COVID-19 vaccines became widely available. The bearish thesis assumed that a company’s golden age of growth would hit a brick wall as people returned to their pre-crisis lifestyles and jobs.

But Fiverr’s dismal results never materialized. Top-line growth has slowed substantially, but has always moved forward. Every earnings report before, during, and after the pandemic has set new records for trailing sales, and declining revenue growth has begun to increase again over the past few quarters.

That said, the health crisis was by no means the entire reason for Fiverr’s success, and the business is growing again after a short period of nearly flat sales.

FVRR return (TTM) data from YCharts.

2. Wall Street pros are starting to catch up.

Analyst recommendations and price targets are not a perfect guide to a stock’s immediate future, but their opinions often have the power to move markets. Currently, the analyst community widely agrees that Fiverr is poised to beat the market next year.

According to wall street journal, 11 analyst firms recently reported ratings on Fiverr’s stock. Eight of them say Buy, the remaining three have decided to Hold and there is no Sell rating in sight. The average 52-week price target is $36.18 per share. This is 16% higher than Fiverr’s current price.

Among these optimistic reviews, financial heavyweights Goldman Sachs We recently raised our outlook from neutral to optimistic, citing the health of the U.S. economy and a steady flow of innovative service upgrades. Goldman expects Fiverr’s profit margins to expand in 2024, with top lines expected to “reaccelerate” due to more customers and increased average spending per customer.

“Based on this framework for current valuation/stock price, we now see that the stock has a positive risk/reward skew,” Goldman analyst Eric Sheridan wrote. That said, Fiverr’s stock appears to be undervalued due to its moderate business risks and low stock price. Sheridan’s price target of $43 per share is well above the Street’s consensus.

3. Fiverr doesn’t rest on its laurels.

An innovative spirit should drive Fiverr’s financial improvement in 2024 and beyond. The company launched several new products, services, and tools last year. for example:

• In 2021, it acquired talent management specialist Stoke Talent for $95 million. Last spring, the platform was renamed Fiverr Enterprise to provide enterprise-level business giants with a seamless platform for the day-to-day management of third-party services. The system includes budgeting, project management, and scheduling tools.
• For buyers of services just below the large enterprise class, Fiverr Pro offers project planning and management services from its extensive pool of freelance talent.
• Fiverr Neo is an artificial intelligence (AI) chatbot similar to OpenAI’s ChatGPT that helps service buyers find suitable freelancers. “The more choices people have, the more difficult they have to choose,” CEO Micha Kaufman said in a product announcement six months ago. Neo helps buyers talk about their needs and requirements and connect them with available freelancers. The tool was launched to Fiverr users three months ago, and more AI features will be added over time.

This continuous innovation in our business model helps us fit perfectly into the young and rapidly developing freelance services market. Not every swing will result in a home run, but hitting .300 can get you into the Hall of Fame.

Continually striving to bring new solutions to its customers, Fiverr isn’t swinging for the fences, but rather building up the all-important basic hits. It’s the willingness to try many new ideas in pursuit of the occasional shining moment that should set the stage for Fiverr’s long-term success.