Fiverr stock is up 740% on the year with just a few days near 2020. In the upset of the great increase in value, though, this is still an almost small company with a market cap of just under $7 billion. COVID-19 is reworking the global economy, and remote work is turning into independent and freelance gigs for many people. That trend has serious momentum, and Fiverr looks like a top way to place it.
The gig economy shifts into overdrive
Faced with unemployment and a new remote-work dynamic, tens of thousands of Americans have turned to self-employment during the pandemic in 2020. In fact, according to data respected by the Federal Reserve Bank of St. Louis, a record 1.57 million new business applications were ordered in the U.S. during the third quarter of 2020 alone. And the U.S.
Many of these new businesses are — and plan to stand — single-employee sole ownership. Fiverr’s platform helps ease freelance work connections between those in need of some help and persons looking to make money off of their skill set. Individually, Fiverr can be used to find and promote gigs in varieties like graphic design, digital marketing, writing, and video animation.
This boom in independence is in turn responsible for the boom in Fiverr stock. The company expects full-year 2020 profits to increase at least 74% over 2019 to $186 million, and the platform is beginning to reach unadjusted benefits for the first time as a publicly traded stock. Besides benefiting from a fast-changing workforce, Fiverr also got an improvement by expanding into new markets in Europe and just now launched local-language sites in Brazil and Mexico. The approach to the internet is opening new ways for people to make money around the world. With growth coming in hot, the stock went from little-known and played-down territory to a high-flying tech name.
Costly but only in the here and Now: Fiverr stock rate
However, Fiverr’s pace of earning growth (and the fact it’s reaching a profitable scale) doesn’t alone explain the huge advance in its share price. Fiverr stock currently trades for 40 times trailing 12-month sales, and its nearly $7 billion market cap price is greater than fellow freelance work site Upwork’s (NASDAQ: UPWK) $4.5 billion caps, even though Upwork has dragged in more than double the revenue in the last year.
Granted, Upwork has been growing at a distant slower pace than Fiverr (24% year-over-year growth during its third quarter), thus explaining the variation in valuation. But Fiverr is certainly costly when looking at current results.
There could be many more workers who connect the freelancer ranks as well. A recent Fiverr overview showed that some two-thirds of the U.S. remote workforce was related to gig work.
Is Fiverr stock a buy? If you’re looking for a quick payment in 2021, that’s far from a guarantee after shares register such a long return in 2020. Expect some serious volatility as Fiverr starts to lap its unusually good results from last year.
I’d caution against making a respectable investment right now, but for investors who want in for the long gains and have room to buy more (perhaps on a quarterly basis), don’t write off Fiverr for 2021. If you decide to buy, just be sure to keep the position small
2 Stocks Benefiting From Businesses’ Increasing Investments in Freelance Talent
I look at the stocks Fiverr International and Upwork. Fiverr recently released research expressing that more than 45% of US businesses have increased their investment in freelance talent since the COVID-19 global began. Below I share a few reasons why investors should attach these two companies to their watch lists.
Three reasons to attach Fiverr to your watch list
- Fiverr reported 100% year-over-year (YOY) earnings growth and 56% YOY working buyers’ growth for the first quarter of 2021.
- Fiverr has solid principles for its trailing 12 months. It has positive cash flow from operations and has more cash and short-term investments than checks.
- Future growth for Fiverr looks strong. The company reported guidance that shows 59% YOY profit growth on the low end for the fiscal year of 2021.
Three reasons to add Upwork to your watch list
- Upwork reported 37% year-over-year (YOY) earnings growth and gross margins of 73% for the first quarter of 2021.
- Upwork has solid basics for its trailing 12 months. It has positive cash flow from operations and substantially more cash and short-term investments than charge.
- In the past few weeks, Upwork has released new products to build on its freelancing marketplace.