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Market-Implied Outlook For Fiverr Is Bearish But Analysts Remain Bullish

Apr. 01, 2021 4:42 AM ETFiverr International Ltd. (FVRR)5 Comments
Geoff Considine profile picture
Geoff Considine


  • FVRR is down 32% over the past six weeks.
  • The Wall Street consensus price target has not fallen as rates rose.
  • The Wall Street consensus target implies a 41% 12-month price appreciation.
  • The market-implied consensus outlook is bearish.
  • My final rating is neutral.

Fiverr (NYSE:FVRR) provides a platform to match freelancers with projects. The platform has over 500 categories of projects, ranging from voice-overs to tutoring and graphic design. As the gig economy grows, Fiverr and competitors such as Upwork (UPWK) have enormous potential as clearinghouses for jobs.

Fiverr’s revenue for 2020 was up 77% vs. 2019 and there were 3.4 million active buyers on the Fiverr platform by the end of 2020. And, of course, the beauty of this type of business is that incremental growth is low cost once the infrastructure is built out. In addition, a site like Fiverr enjoys strong network effects. As more people use the service, the company becomes more valuable.

YTD price history and basic statistics for FVRR (Source: Seeking Alpha)

FVRR closed at a high of $323.10 on February 12th. Today, the shares are trading at $219, a decline of about 32% since February 12th. February 12th was also a peak close for the QQQ, from which it has declined 4.9% to today. Many fast-growing tech firms have seen their shares drop substantially over this period. Teladoc (TDOC), for example, has declined about 38% over this date range.

The decline in these types of firms is largely due to the rise in interest rates because these (fast-growing) stocks effectively have long duration in terms of realized future earnings (also see this article). To put this differently, the net present value of earnings in the future is lower as interest rates rise. Stocks such as FVRR, for which the value is overwhelmingly based on future earnings relative to current earnings, will be more sensitive to interest rates.

10-Year Treasury yield over the past 12 months (Source: CNBC)

The challenge for investors, of course, is how to value companies that are young and growing very quickly. For a compelling summary

This article was written by

Geoff Considine profile picture
Geoff has worked in quantitative finance for more than twenty years. Before entering finance, Geoff was a research scientist for NASA. Geoff holds a PhD in Atmospheric Science from the University of Colorado - Boulder and a BS in Physics from Georgia Tech. Neither Geoff Considine nor Quantext (Geoff's company) are investment advisors. Nothing in any commentary here on Seeking Alpha or elsewhere shall be regarded as advice.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (5)

jasmine4657 profile picture
This proves one more time, all those analysts can do is to 1) FOMO and FOMO when market is bullish and frothy. 2) run away and run away when market is bearish.
Fiverr is going much higher this year even if it has another pullback to 200 or 190 first. Expect 300/share by this Fall..
Joshua Sorto profile picture
This was a very informative article!

My 2 cents for why analysts aren't bearish compared to the market is because analysts are taking the FED statements at face value when they say rates won't rise until 2023 and any inflation increases we see this year will be temporary.

Meanwhile Mr. Market is much more concerned about inflation.

Personally I think inflation fears are overblown and we'll see interest rates in the treasury market decline later this year. (I say this expecting Biden's stimulus proposals to die in congress) The market regularly over reacts to scary possibilities. This wouldn't be the first time the market wrongly expected inflation to pick up.

Also in the lead up to the Persian Gulf war back in 1990 the Market was scared the war would be long and bloody so stocks tanked. The actual war lasted 7 months and the U.S. had 146 casualties.
Thank you for your articles , it is informative, i was wondering if you would do similar option pricing analysis of Biogen ( BIIB ) for the next 12 months and also during the period between June and October 2021 ( it is expecting FDA decision on its Alzheimer Disease drug in June 2021 ) it will be a good case of comparison of your option pricing model predictive power too. thank you again
Thanks this is very illuminating. Would be interesting how this compares versus Upwork - one of Fiverr’s closer peers.
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