Fiverr International’s (NYSE:FVRR) growth story is remarkable, from connecting freelancers with an initial modest service charge of $5 to expanding into a worldwide e-commerce platform serving a huge marketplace. While the company enjoyed significant growth during COVID, the past few years have been challenging. FVRR share price has declined 89.38% over the past three years, punctuated by recent Q4 financial results that fell short of revenue expectations. However, the decline in the stock’s price may make it an interesting value play.
From $5 to Billions
Fiverr facilitates the connection between freelancers and potential employers, offering a wide array of services ranging from digital marketing, graphics, video, animation, and even music and audio.
While the platform initially gained its name from its minimum service charge of $5, sellers now have the option to set their own prices. Over the years, Fiverr has grown from its humble beginnings to a multi-billion-dollar global freelancing marketplace, revolutionizing how gig workers and businesses connect and operate.
Recent Financial Results
Fiverr recently reported Q4 results that fell short of consensus revenue estimates. The company’s revenue reached $91.5 million, reflecting a 10.1% year-over-year increase but slightly below analysts’ forecast of $92.56 million. Despite a decline in active buyers by 5% year-over-year to 4.1 million, the company showed an encouraging 6% year-over-year increase in spend per buyer.
Fiverr’s adjusted earnings per share (EPS) exceeded expectations, with a solid leap from $0.26 to $0.56 outperforming consensus estimate of $0.48 per share.
Despite the uncertain macroeconomic environment, management maintained an optimistic outlook. The company expects Q1 revenue in the range of $91.5 million to $93.5 million, with adjusted EBITDA between $12.5 million and $14.5 million. The full-year projections for 2024 were also encouraging, with revenue expected between $379 million and $387 million and adjusted EBITDA projected to land between $65 million and $73 million.
Is FVRR a Buy, Hold, or Sell in 2024?
FVRR trades near the bottom of its 52-week range of $20.04 to $41.22, with mainly bearish technical indicators – trading below the 20-day moving average price of $25.38 and a 50-day moving average price of $26.09. The downward price momentum suggests the stock may continue to see negative price movement in the near future. However, FVRR stock trades below its historical average on a Price-to-sales (2.587 vs. an average of 13.41) and EV-to-EBITDA (68.76 vs. an average of 78.02) basis, so it may represent a value at this level.
Analysts are cautiously optimistic about the stock’s long-term potential. Among the more bullish is Eric Sheridan, a Goldman Sachs analyst, who maintains a Buy rating but lowered the price target from $43 to $39 to reflect short-term pressures. In a recent research note, Sheridan expressed optimism about the company’s prospects, given its initiatives to drive long-term growth and the dominant position in the online freelance marketplace.
On TipRanks, FVRR currently ranks as a Moderate Buy, based on six Buys versus three Holds. The average price target represents a 38.36% upside from current levels.
Wrapping Up
Fiverr’s outlook remains somewhat mixed. Despite falling short of Q4 revenue expectations, the company significantly improved adjusted earnings and anticipates a positive trajectory for 2024. The stock trades at a significant discount to its 52-week peak, owing to negative market sentiment and bearish technical indicators.
However, considering its relatively lower Price-to-sales and EV-to-EBITDA ratios, there may be a potential value play at the current price level, offering an attractive investment opportunity for longer-term investors.
