Easily ranking among this year’s top performers, freelance networking platform stock Fiverr (NYSE:FVRR) blasted up to the tune of over 54%. Now, the question is – can it still move higher? Fundamentally, the underlying narrative remains positive because the company directly relates to the burgeoning gig economy. Long term, I am bullish on FVRR stock.
Headquartered in Tel Aviv, Israel, Fiverr helps connect gig workers (or independent contractors, to use the official term) with businesses typically seeking help under short-term contracts. Even before the dramatic events of the post-COVID paradigm, Fiverr tied into a relevant movement. According to Business Research Insights, analysts there project the global gig economy to be worth $873 billion by 2028.
More importantly, for FVRR stock, it’s possible that this extraordinary projection might be understated. As TipRanks contributor Steve Anderson pointed out, technology firms, both big and small, issued mass layoffs recently, and this trend will likely accelerate throughout the new year.
As Anderson mentioned in another report, even with the tech sector’s pink slips, the labor market broadly remains robust. In the most recent employment print, “non-farm payrolls were up 517,000, substantially higher than the 188,000 that was expected.” While positive for anyone looking for a (non-tech) job, it also means more dollars will chase after fewer goods.
In turn, the Federal Reserve may tighten the money supply, spiking already-elevated interest rates even higher. Essentially, this dynamic should accelerate tech layoffs – particularly the earnings-deficient examples – which cynically bodes well for FVRR stock. Here’s why.
FVRR Stock to the Rescue
During this period of increasing mass layoffs, worker bees face a conundrum. While the recently axed want to get access to another paycheck, they also experienced the life of the gig worker; that is, they could get paid while largely doing what they want on their own terms, without a supervisor/manager watching their every step. Moving forward, though, only the gig economy can reliably provide this working arrangement, boding well for FVRR stock.
For both investors and members of the broader working class, it’s important to realize one harsh reality: companies aren’t stupid. According to the American Management Association, its 2019 survey revealed that the average worker wasted more than two hours daily. In total, this procrastination added up to $759 billion, for which employers received no apparent benefit.
By the way, this $759 billion represents about 87% of the gig economy’s projected valuation in 2028. Recognizing this data, it’s highly unlikely that the average – and apparently morally compromised – worker suddenly became ethical with no supervision.
Essentially, the gig economy solves the problem of the lazy and entitled worker. Under a contract-based environment (as opposed to an employment arrangement), if you don’t work, you don’t get paid. It’s as simple as that.
For those that are truly committed to the independent professional lifestyle, the gig economy represents a godsend. Getting started, though, imposes an obvious hurdle. Here, Fiverr comes into the picture, connecting willing and capable professionals with businesses seeking short-term help. As a gig worker’s reputation rises, more opportunities will come in.
It’s great for Fiverr, great for the parties involved, and ultimately great for FVRR stock. Thus, its rise in the equities sector is likely no fluke.
Trust in the Narrative
Although the forward prospects of FVRR stock appear compelling, investors must trust in the narrative. Like it or not, Fiverr epitomizes the classic high-risk, high-reward opportunity. Incredibly aspirational, the present fiscal snapshot leaves much to be desired.
About the only real positive for Fiverr stems from its three-year revenue growth rate. At 41.1%, this stat ranks better than over 85% of industry players. As well, the company’s book growth value rate during the same period stands at 75.7%. This ranks better than over 91% of its peers.
However, as Fiverr expands, the law of large numbers dictates that massive growth won’t come so easily. Problematically, the enterprise remains deeply unprofitable. In its most recent Q3-2022 earnings report, Fiverr disclosed a net loss of $11.35 million. Further, its retained earnings line item stands at about -$287 million.
At some point, investors will want to see a path to profitability. However, the underlying narrative – many professionals giving a go with the gig economy as opposed to rejoining the corporate rat race – should provide exactly that.
Is FVRR Stock a Buy, According to Analysts?
Turning to Wall Street, FVRR stock has a Moderate Buy consensus rating based on six Buys, four Holds, and zero Sell ratings. The average FVRR stock price target is $40.00, implying 9.8% downside potential.
The Takeaway: FVRR Stock Feeds Into a Growing Movement
While Fiverr needs some work on its financial stability, as an aspirational investment, FVRR stock is difficult to ignore. With the gig economy projected to be a legitimate economic powerhouse, Fiverr’s addressable market will only grow from here.