Is It Safe To Buy Fiverr Stock After Earnings?

Fiverr (FVRR) stock price will be in the spotlight after the company published its fourth-quarter financial results. It rose modestly by 4% in extended hours even though it remains much lower than its all-time high of $335. In other words, $1,000 invested in the company at its peak in $2021 is now worth just $74. 

 

Fiverr earnings

Fiver, the freelancer marketplace, published mild financial results on Wednesday. Its quarterly revenue rose by 10% in the fourth quarter to $91.5 million. 

This revenue growth happened as the number of active buyers dropped slightly to 4.1 million, signaling that demand is not all that strong. 

However, these buyers are spending more as the average spend per buyer rose to $278. Its net income for the quarter stood at $23.1 million.

For the year, Fiverr’s revenue rose by just 7.1% to $361 million while its net income was just $3.7 million. The management expects that its revenue will be between $379 million and $387 million this year. 

These numbers mean that the company’s growth is not all that strong. As a result, this trend has disqualified it as a growth company, meaning that how it is valued ought to change. 

In this case, using the upper side of its guidance, it means that the company is trading at 2.7x estimated sales and 13x estimated EBITDA. This means that it is a bit overvalued company unless it does something to invigorate growth.

For example, Upwork, its biggest competitor, is seeing stronger growth. Its revenue growth in the last quarter was 13%. The company is trading at 2.1x estimated sales and 12x estimated EBITDA. 

The challenge for Fiverr is that its growth has already peaked. This happened during the Covid-19 pandemic when demand for freelance solutions jumped. Now, like PayPalthe company is contending with a new normal that is being characterised by slow growth. 

 

Fiverr stock price forecast

FVRR chart by TradingView

The daily chart shows that the FVRR share price has come under pressure in the past few days. It has moved from this month’s high of $31.63 to $25.90. The stock has retested the lower side of the ascending channel, which is shown in red.

It retreated slightly below the 50-day moving average. Also, the two lines of the MACD indicator have drifted downwards while the Relative Strength Index (RSI) has moved below the neutral point of 50.

Therefore, there is a likelihood that the stock will have a bearish breakout as sellers target the key support at $20.14, its lowest point in November last year. This target is about 22% below the current level.

The alternative scenario is where the stock rises and moves to the upper side of the channel at $31.63. 


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Adam Reynolds 1 month ago Member's comment

I'm fond of $FVRR, I think it's a good stock with a bright future.