The freelancer platform's stock has lost slightly more than half its value year to date.
Investors are feeling increasingly jittery about stocks that received a huge pandemic boost. Fiverr is one such company, as many people turned to freelance gigs while being locked down in their homes. Sentiment has soured for the company as numerous countries start opening up their borders and workers head back to their offices, and investors believe that this means that growth will slow down drastically for Fiverr.
Another reason for the sharp sell-down could be news of a big interest rate hike from the Federal Reserve to combat the highest inflation the U.S. has seen in the last four decades. The rate hike of 0.5 percentage points was eventually passed, the largest upward movement in the last 22 years. Because of expectations leading up to this big move, the Nasdaq Composite index lost 13.3% in April alone as investors bailed out of growth stocks en masse.
Fiverr reported a 57% year-over-year surge in revenue to $297.7 million for 2021, and investors may also have been disappointed by the company's guidance for 25% to 27% year-over-year growth for 2022. However, there are signs that the company has been gaining traction in attracting more clients onto its platform, with total active buyers increasing from 2.4 million in 2019 to 4.2 million in 2021. Spend per buyer also increased by 18% year over year to $242 for 2021, and annual gross merchandise value hit $1 billion for the first time in the company's history.
Notwithstanding the above headwinds, Fiverr has continued to add new features to its platform to increase the stickiness of its users. Just this week, it launched AI Auditions, a tool that allows voiceover artists to record voiceover samples for different types of projects without needing to read from a script. Buyers can then sample the artist's work without contacting them or inviting them to an audition, which increases the efficiency of the hiring process and saves time for both parties.
Investors also should not forget that barring these temporary headwinds, Fiverr still has a $115 billion addressable market that it can tap into. Even when the pandemic eases, many will still choose hybrid work and the gig economy should remain buoyant, thus allowing the company to continue to grow slowly but steadily in the years ahead.