What happened
Shares of Fiverr International (FVRR -0.96%) fell by 25% in January, according to data provided by S&P Global Market Intelligence.
The freelancer platform has seen its shares shrivel by around 70% over the past year, falling from around $280 to $85.
Image source: Getty images.
So what
On the surface, Fiverr seems to have done nothing wrong. The company reported strong growth when it released its 2021 third-quarter earnings, with revenue for the third quarter jumping by 42% year over year to $74.3 million. For the first nine months of the year, revenue surged by 63.1% year over year to $217.9 million, and Fiverr expects revenue for the fourth quarter to maintain the same momentum, growing by between 33% and 39% over the same period a year ago.
Operating metrics were also healthy, with active buyers increasing by 33% year over year to 4.1 million and spend per buyer improving by 20% year over year to $234. Take rate has also steadily risen from 27% a year ago to 28.4% in the current quarter as the company increased its variety of tools for providers of services (i.e., freelancers).
Investors, however, were spooked by two events. With COVID-19 restrictions easing in various parts of the world, some semblance of normality has returned to most economies. Although telecommuting and hybrid work looks set to remain a core feature of the post-pandemic world, investors are justifiably concerned as to whether Fiverr can continue posting the breakneck growth it had experienced at the onset of the pandemic. The other worry is that rising interest rates, on the back of soaring inflation, could be a dampener for the company. Its latest balance sheet shows that it carried $367 million of convertible notes that exceeded its cash and marketable securities. Should Fiverr need to tap on debt for further expansion, it could be a more costly affair.
Now what
The company is moving forward with new initiatives and acquisitions to grow its business. It launched a new brand campaign called "Something from Nothing" in October with a series of videos and TV advertisements in the U.S., U.K., Germany, and Australia to promote its tools and resources by encouraging freelancers to turn their ideas into reality.
Fiverr also completed its acquisition of Stoke Talent, a freelancer management platform, and CreativeLive, an e-learning platform, to help to expand its suite of services and make both buyers and sellers stickier. The company may be facing headwinds for now, but with the constant push to improve itself and broaden its offerings, it may emerge as the freelancer platform of choice in the new normal.
