Home Investing & Trading Is Fiverr Stock a Good Buy Right Now?

Is Fiverr Stock a Good Buy Right Now?

by Alan Daniel
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Fivver is an interesting company that meets a need for employers and those who want to work. Platforms such as Fiverr connect the two parties together, for a fee. Fiverr earns money from the transaction and strives to increase its transaction volume. The Israeli firm’s job is to create the best experience possible for both parties so that freelancers and employers come back time and again to the Fiverr platform.

If you’re a Fiverr optimist you’re looking to scoop up the stock at these seemingly low prices, you think that the company will figure it out in the end. If you’re on the sell side, you think that there’s a host of problems that make it to where companies within this niche never turn profitable.

Let’s take a look at both sides of the picture for Fiverr stock and understand the big picture.

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Here’s Why You’ll Buy Fiverr Stock

  1. Revenue Momentum – Fiverr stock investors are happy to see substantial revenue growth over the prior quarters. The company’s revenues have been bolstered by regular and increased buyer spending. The company will continue to see revenue growth if current customers spend more or if they attract new customers and sellers. The firm boasts more 2 million buyers on the platform.
  2. Possible Quality Increase – Remember that the Israeli firm started off by acting as a low cost alternative for all sorts of gigs. Startups and small businesses could find the talent they needed for a low cost. They could quickly find the talent, then have the job done in a seamless manner. If they didn’t like the job, they could take it up with the freelancer or with the platform. The company still has that aspect but is evolving to include a component called Fiverr Studios and Fiverr Pro. Fiverr Studio is where you can make one transaction and have your entire project taken care of by a team of freelancers. For example, you want to launch a brand, you need a website, a logo, great copy, domain, hosting, all that jazz. What do you do? Search for each labor input? No. You just go to a studio that will take care of everything for you. The idea is to streamline the process even further. Further, Fiverr Pro, makes it to where you can find outstanding freelancers at competitive prices.
  3. Recession Resistant – The gig economy is anti-fragile, or so the thinking goes. Past data shows that the gig economy grew substantially during and after the Great Financial Crisis. The rise of Uber, Lyft, and other on demand services, in addition to corporations becoming more lean, also prove to be great trends for this specific company. It shows that more are working several jobs and interested in earning income in many ways to supplement income and meet goals. Which means that Fiverr stock should have a positive affect or neutral affect during a recession.
  4. Fiverr Stock is Value – The Fiverr stock has seen a significant correction since IPO’ing last year, it had an IPO pop but corrected to almost half its IPO share price. The stock has bounced back but still has quite a bit of ways to go before it comes back to its initial high off $44.25. Fiverr stock is trading at $22 at the time of this writing.

Here’s Why You Will Want To Stay Away from Fiverr Stock

  1. Competition –Fiverr is far from being alone within this freelancer market. Several firms and companies service this niche directly and indirectly. You could try and connect for tasks on Craigslist, on Facebook, or other platforms in a direct or more helter skelter way. One of the more prominent competitors is Upwork. Upwork is one firm that traces back to the 2000’s where it was two firms that decided to merge and become one large giant. Upwork also went public recently and has been humbled by the markets. The stock price is at about half of its initial value.The market isn’t too happy with Upwork due to lack of profitability. Same goes for Fiverr.
  2. Profits – The problem with the latest batch of IPO’s is that these companies have been around for a while but have quite a ways to go for profits. Fiverr does have a strong cash position at around $140 million, further it only has a debt position of around $6 million Further, the firm can has excess assets to cover liabilities in the near term and long-term. The company is healthy enough to operate for at least two years with its current assets and cash position. Even more, the company should be profitable by 2022 after rapidly increasing revenues.
  3. Customer Experience – The internet and the world wide web makes a company like Fiverr possible but it can also leave you scratching your head wondering why no one has come around and disrupted the model. Will sellers continue to fork over 20% or more of their revenues to Fiverr? It seems like it will continue to happen until the seller and the buyer can continue the relationship off the platform. But the buyer also incurs a fee to finalize the transaction and to even send a tip. It looks like both buyers and sellers seem fine with the model as Fiverr has increased revenues but is there a better model that renders Fiverr to become less appealing?

Should You Buy Fiverr Stock?

That’s up to you to decide. It’s a risky company but its also a growth company and if the growth continues, then investors may see great rewards.

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