What happened

Shares of Fiverr International (FVRR -1.81%) fell by as much as 13.8% on Wednesday, and closed the trading session down by 13%. The freelance marketplace operator announced a new dilutive stock offering Tuesday night. In addition, the market was taking a generally dim view of high-flying growth stocks Wednesday.

So what

Fiverr said it would be raising $700 million through a public stock offering to be underwritten and managed by three large banks. The underwriters will also be able to purchase additional shares at the original offering price within 30 days, raising the potential cash infusion to a maximum of $805 million. That would work out to roughly 2.9 million new Fiverr shares, assuming that the banks make full use of their delayed purchase options. Fiverr's current shareholders will see the value of their shares diluted by approximately 8%, which explains more than half of Wednesday's price drop.

The company was also caught in a marketwide retreat from high-growth stocks as well as a more sharply defined flight from companies that have been benefiting from the impacts of the pandemic. Americans now have access to three effective vaccines, and President Joe Biden said Wednesday that by the end of May, the U.S. will have taken delivery of enough doses to inoculate every adult in the country.

A hand pushes a yellow button on a casino machine, marked Collect Bank.

Both Fiverr and its investors are cashing in some stock gains today. Image source: Getty Images.

Now what

Fiverr most certainly qualifies as a growth stock, and its business has been booming during the pandemic. Even after Wednesday's dramatic correction, the stock is up 713% from where it traded 52 weeks ago, and up 1,085% from where it hit bottom in mid-March 2020. The fourth-quarter report it delivered in February showed 90% year-over-year revenue growth as its bottom line swung from a loss to earnings of $0.12 per share.

While the COVID-19 pandemic provided a boost to its business, Fiverr's growth story won't end there. Taking some gains off the table at this point makes sense for some investors, and the company itself is taking advantage of its high share price with a timely stock sale. However, I'm not selling any of my own Fiverr shares. This company has a lot of growth left to deliver as the gig economy continues to evolve.