Fiverr Price Target: Investing in the freelance or work-from-home sector stocks has been life-changing for investors who got in before the pandemic forced over one-third of employees to work from home. In 2019, less than 6% of employees worked mainly from home. Today, nearly 40% still do.
Gig economy powerhouse, Fiverr (FVRR) – while still a relatively young stock – could prove to be a windfall of a buy.
What is Fiverr?
Fiverr offers a platform for freelancers to connect with companies that need various services, such as web and graphic design, content writing, dropshipping, logo design, voiceovers, videos and scripts, and proofreading and editing.
Micha Kaufman and Shai Wininger founded Fiverr in 2010. The company is headquartered in Israel and offers a platform for freelancers and the companies who need them.
Fiverr’s brand is based on the idea of streamlining the hiring process for freelancers, offering freedom of choice to freelancers and an easier way to get smaller jobs completed for companies.
When first launched, as the company name implies, all freelance services cost just $5.00. Today, freelancers can set their own prices or offer packages.
Services offered by the company include:
- Fiverr
- Fiverr Learn
- Fiverr Business
- Promoted Gigs
- Seller Plus
Is Fiverr Doing Well Financially?
According to the most recent earnings call, CEO Micha Kaufman thinks so. Kaufman says, thanks to “strong execution” and “continued growth momentum”, that Q2 offered revenue growth of 60% YOY.
The company continues to see the most revenue from long-time buyers, and most new buyers come to the site organically. Total spend per client/buyer continues growing, thanks to the implementation of various initiatives, as well as Fiverr’s Milestones and Subscriptions tiers.
In fact, new buyer acquisitions continue growing. Q1 saw 27.2% revenue from new buyers, while Q2 increased to 27.8%.
Fiverr Business, though one of the company’s newest offerings, already accounts for 5% of the company’s business. Fiverr Business is growing faster than the company as a whole.
It’s still early, but the company expects this to become the go-to for large business. Fiverr Business was introduced just over a year ago and already shows signs of a significant spend increase among business buyers.
The company says Fiverr’s offerings aren’t the only reason the company’s growth continues. Fiverr provided a service people didn’t know they needed at the time. Couple that with today’s demand for increasingly skilled talent, a boom in remote work, and the continued investment in and development of digital channels, and Fiverr’s in the right place at the right time.
In addition to the company’s own offerings, it’s also recently partnered with Salesforce (CRM) and the website design platform, Wix. Customers of both services can seamlessly access Fiverr’s talent.
Digital investments and innovation allow Fiverr (FVRR) to keep the top spot, enabling more buyers and freelancers the chance to participate in digital services and the gig economy.
Programs like Fiverr Learn are helping sellers prepare for sales with the skills businesses look for.
Overall, 2021 appears to be a good year. With the information from the Q2 report, Fiverr expects revenues of $280-288 million – a YOY growth of between 48% and 52%.
On the lower end, hyper-seasonality is expected to continue. At the higher end, the company expects, after a long year of having to remain at home, that people will ease back into their normal routines – freelancers and executives alike – and it’s expected by Q4.
Full-year EBITDA, after adjustments, is expected to come in around $12-14 million with a 4.6% margin.
Fiverr Historic Performance
Since going public on June 13, 2019, Fiverr has doubled its active buyers, tripled revenue, and positively shifted EBITDA margins almost 30%. Growing much faster than competitors like Upwork (UPWK), Fiverr has effectively expanded its market share of the gig economy, setting industry standards.
The pandemic certainly benefitted companies like Fiverr especially, but many companies have seen impressive growth in Q2 2021 as the world shook off its confinement.
Governments lifted restrictions in the last half of May and people were ready to shed their laptops. While certainly what the world needed, it also meant a lot less time online. For Q2 growth to have been so substantial during a summer when vacations were certainly in order is impressive.
That said, Fiverr is adjusting guidance for FY 2021 based on these microtrends. Fundamentals continue to be strong, but less activity online means new cohorts are a bit more modest and less active. Kaufman reiterates, however, that it will not change Fiverr’s overall strength, outlook for the long term, or the massive opportunity still ahead.
Is Fiverr Stock A Buy? (FVRR Price Target)
Many investors seem to believe that the pandemic and Fiverr’s good fortune are inextricably linked, resulting in the stock jumping when there’s a new variant and falling along with infection rates when they taper. But could it really be that simple?
As unfortunate as the pandemic is, Fiverr does seem to have gotten a boost from it. But this boost should be long-lasting, granting Fiverr benefits that will long outlive it.
Freelancers who discovered Fiverr during their layoffs or furloughs won’t forget about or stop working on the platform. Individuals and businesses who discovered the platform for the first time this past year aren’t likely to look elsewhere simply because a health crisis becomes history.
Plus, Fiverr continues reinvesting its wins into even more opportunities for revenue growth – another effect that won’t simply go away should the virus be quashed.
Is Fiverr stock a buy or a sell? With so many selling shares, this could be a good time to get in if you think the company’s current sales and revenue will stay strong far into the future.
From a discounted cash flow analysis perspective, the fair market value or Fiverr price target is $215 per share. That represents significant upside opportunity at the time of writing from where the share price currently sits.
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