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Fiverr International (NYSE:FVRR) Stock a Buy: Freelance Flier

Thursday, August 6, 2020 | Sean Sechler
Fiverr International (NYSE:FVRR) Stock a Buy: Freelance Flier

What if you could find a company that combines two of the biggest catalysts in the stock market right now, the increased demand for e-commerce and the rise of remote work? The global pandemic has changed the way that people are working and created a unique opportunity for businesses that offer products or services online. This has lead certain companies to suddenly experience massive boosts in revenue which has sent their stock prices soaring.

One such example is Fiverr International (NYSE:FVRR) stock, a company that offers remote work services on a user-friendly e-commerce platform. The gig economy is seeing a huge uptick in demand as freelancers stay busy in an uncertain economy and businesses try to save money on labor. This is a big reason why Fiverr is a stock that should be on investors radar going forward. After reporting a strong Q2 earnings report, Fiverr stock is breaking out to new highs and is up over 400% since the beginning of the year. Here are a few smart reasons to consider adding Fiverr International stock to your investing plans.

Freelance Frenzy

With a lot of companies laying off salaried employees at alarming rates, there has been a big increase in the demand for freelance work. It makes sense that companies are turning to gig workers since they can hire freelancers to handle specific tasks at a fraction of the cost they would have to pay their full-time employees. As more companies begin to realize the amount of money they can save by hiring freelancers, it’s safe to say that they will continue using services like Fiverr to contract them. You also have to consider the workers that have been laid off and are looking to replace lost income with freelance jobs. These trends are both working directly in Fiverr’s favor, which makes money on service and transaction fees on each job.

Fiverr is one of the largest online freelance marketplaces that connects freelancers to customers via a user-friendly online platform. Some of the common job categories that are offered on its platform include software development, photography, marketing, copywriting, and graphic design. Along with Upwork (NASDAQ: UPWK), Fiverr is a leader in the freelance marketplace and we should see the freelance frenzy continue as the economy remains fragile. Fiverr is also focused on expanding into international markets, which appears to be a key growth strategy for the company that could pay off big for shareholders over the long term.

Massive Q2 Growth

If you were looking for confirmation that Fiverr is benefitting from current market trends, look no further than the company’s Q2 earnings results. It exceeded market estimates for Q2 earnings dramatically which sent shares up over 17% during Wednesday’s trading session. Q2 revenue grew 82% year-over-year and the company achieved quarterly Adjusted EBITDA profitability for the first time in its history. There was also a large yearly increase in Active Buyers, which grew 28% to 2.8 million in Q2, confirming the increase in the number of transactions on the company’s platform.

These numbers verify that Fiverr is taking advantage of the opportunity that it has been presented with and helping to play a key role in the remote work revolution. The company’s business model seems poised to continue putting up strong results for shareholders, and Fiverr’s management team even raised its full-year fiscal guidance. This is interesting since major competitor Upwork withdrew its full-year guidance back in May. Fiverr is anticipating 66-68% year-over-year revenue growth for FY 2020, which means that they expect to operate at a high level for the remainder of the year. The positive Q2 results and increased forward guidance should help to reassure investors that Fiverr stock is absolutely worth a look for the long term.

The New Normal

Without a doubt, remote and freelance contract work is here to stay, which means that Fiverr stock is worth checking out. The continued growth opportunities and strong earnings for Fiverr are propelling the stock higher, and if they can execute on their plans for international expansion the company could be a very rewarding investment. Fiverr is a buy based on these factors, but keep in mind that the stock is currently trading at a premium thanks to the earnings boost. With valuations stretched, it’s probably best to look out for a pullback into the $90s before considering adding shares to your portfolio.

Companies Mentioned in This Article

CompanyBeat the Market™ RankCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Upwork (UPWK)1.6$16.70+9.7%N/A-64.23Buy$14.67
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