Can Fiverr (FVRR -1.20%) keep growing from where it is today? In this Motley Fool Live segment from "Ask Us Anything," recorded on June 1, Fool.com contributors Rick Munarriz and Travis Hoium evaluate the key metrics for determining this stock's future potential.
Rick Munarriz: Is it possible for Fiverr to get to 200 or can it just simply beat the market for the next 5-7 years, without even getting close there, but at least getting to the triple figures. Anyone have some thoughts on that?
Travis Hoium: Yeah, I can start with that. Just to think about, let's see here, I changed my chart here, so to $200 would be a 5X from here. If we just say that Fiverr is going to have the same price to sales ratio as it does today, which is about four, I think averaged over the pre-pandemic was in that 4-8 range, for a price to sales ratio. They would need to grow revenue about 4 or 5X. They've done that in the last five years. I think that's kind of the context to think about is, this is a growth stock. I think the thing that's really hard right now as an investor is to say, OK, this is a growth stock. They've been beaten up. But when I put my five, 10-year goggles on, and I say "What is this company going to look like? Are they going to be able to continue growing?"
This is the kind of company I think it is going to be able to continue growing. Maybe they're not going to grow 400 percent over the next five years. But could they grow 200 percent? Sure, absolutely, they could do that. I really try not to price anchor when I saw in here specific dollar numbers. I think that's what I immediately think of is like Zillow is one that I own, that I'm weighed down on. I don't want to price anchor on where I purchased or maybe where the high was. But rather think about, OK, knowing what I know today, is this a company that I want to own, and in that one, the answer is yes. I think Fiverr is another one where at today's price, would I be selling it? No, because I think I like where the businesses today is. It's tough not to price anchor on whatever your cost basis is.
