What happened
Before the opening bell on Wednesday, Fiverr International (FVRR 4.07%) reported first-quarter earnings and revenue that were ahead of analysts' consensus estimates. Even so, the stock plummeted in morning trading as investors looked past the company's solid results and focused on the fact that management cut its 2022 revenue guidance.
Fiverr's shares were down a staggering 25% as of 1:46 p.m. ET.
So what
Fiverr reported first-quarter non-GAAP earnings of $0.11 per share, which was far better than the loss of $0.01 per share it booked in the year-ago quarter, and handily beat analysts' consensus estimate for earnings of $0.02 per share.
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The company's sales of $86.7 million -- up 27% year over year -- were also slightly better than the $86.4 million that Wall Street was expecting.
But investors essentially ignored the company's top- and bottom-line results due to management's weaker outlook.
Management lowered Fiverr's sales guidance from its prior range of $373 million to $379 million down to an updated range of $345 million to $365 million.
Now what
It would be an understatement to say that investors have been on edge lately. With inflation at a 40-year high and the Federal Reserve on track to hike the benchmark federal funds interest rate as many as five more times this year -- on top of its recent 50-basis point hike earlier this month -- investors in growth stocks are particularly skittish when it comes to any signs that a company's growth is slowing down.
They found reasons to believe just that about Fiverr based on its new revenue guidance. With the company's sales not expected to be as robust as management had originally anticipated, traders were quick to dump the stock and look for what they hope will be safer places to put their money.
That doesn't mean that Fiverr can't still be a good long-term investment, but with the stock down by 81% over the past 12 months, it's certainly testing investors' resolve.
