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Fiverr Looks Attractive amid Improving Traffic
Stock Analysis & Ideas

Fiverr Looks Attractive amid Improving Traffic

On November 10, Fiverr (FVRR) recently delivered strong Q3 results and an upbeat outlook for Q4, and its shares have been on the bull run ever since.

It is important to note here that the company’s Q2 was pressured by hyper seasonality issues, which were caused by decreased online activity as a result of the post-pandemic reopening of economies. However, as management stressed, the effects started to normalize during the quarter, and traffic to the Fiverr platform improved.

Improved Q3 Website Traffic

Being an online platform for freelance services, the volume of traffic to its platform determines its business strength.

Interestingly, we verified the website traffic information provided by the company, on TipRanks’ new Website Traffic tool, which sources its data from Semrush (SEMR). We found that the visits to Fiverr’s website from unique users grew steadily from July through September, after weakening in Q2.

As we delved further into the data, we saw that website visits have increased 4.6% this year on a quarter-to-date basis, as compared to the corresponding period last year.

User Data by Geography

In order to get deeper insights into the web-traffic trends and user behavior, we delved into the website traffic data by region.

We found that the U.S. took the largest piece of the pie in October, at 29.4%. Meanwhile, 6.8% of unique virtual visits were from users in the United Kingdom, putting the country in the second position. The U.K. was followed by Pakistan (6.4%) and Bangladesh (6.1%).

Expert Weighs In

Following the Q3 print, Needham analyst Bernie McTernan seemed optimistic about Fiverr’s take rate, which increased around 50 basis points sequentially and 140 bps year-over-year. This is due to a successful implementation of a 50 bps rise in service fees, the introduction of complementary services like Promoted Gigs and Seller Plus, which brought in additional revenues.

McTernan reiterated a Buy rating on Fiverr and raised its price target to $205 from $200. “It appears the worst of hyper seasonality is behind Fiverr, pointing to improving trends in September and October and guiding to sequential revenue growth in 4Q21,” he noted.

However, the management call also cautioned against slight seasonality in its Q4 outlook. This was taken into account by McTernan, who said, “We are also taking a potentially conservative view on 2022 estimates, with only a modest flow-through of the beat and raise from 3Q21 results.”

Wall Street Cautiously Optimistic

Turning to Wall Street, the analyst consensus is cautiously optimistic about Fiverr, with a Moderate Buy rating based on two Buys and two Holds. The average Fiverr price target of $199 indicates upside potential of 9.2%.

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.

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