With U.S. gross domestic product (GDP) falling for a second quarter, there are growing fears the economy will slip into a recession. Recessions are challenging for many companies, but some businesses can thrive.

Freelancing marketplace Fiverr International (FVRR 0.60%) was a big winner during the pandemic. While there are differences between then and now, there is reason to believe a recession could boost business for Fiverr moving forward.

The workforce then versus now

It seems silly at first to compare the economy during the height of the pandemic to now. After all, unemployment soared to double digits in 2020 while humming at just 3.6% today.

US Unemployment Rate Chart

US Unemployment Rate data by YCharts

The Washington Post reported that real wages across the U.S. have declined; wage growth has been more than offset by the highest inflation in decades. Additionally, with the increased cost of living, people are paying more for necessities, which is driving them to seek additional work to make ends meet.

Unemployment may be under control, but people are looking for ways to make more money, and rather than work a low-wage job, some may be looking to turn their skills and talents into income.

Fiverr thrived in 2020 because lockdowns kept people out of their jobs, and many freelanced and started side hustles to generate income. Fiverr's year-over-year active buyer base grew 45% to 3.4 million in 2020 versus 16% in 2019.

Buyer growth continued in 2021, growing to 4.2 million, a 23% increase over 2020. However, buyer growth was effectively flat from Q4 of 2021 to Q1 of 2022. Different circumstances but a similar need for people to earn a living in new ways may reinvigorate Fiverr's buyer growth.

A company with many levers to pull

Fiverr's revenue hit a record $86.7 million in Q1 2022, a 27% increase from the prior year, despite active buyers remaining virtually flat. How? Fiverr has multiple levers to pull to drive growth.

The company is concentrated on investments and marketing to attract enterprise buyers to the platform, a segment it calls Fiverr Business. Its enterprise services include specialized dashboards and white glove service from a dedicated success manager. Going upmarket has helped Fiverr grow its average spend per buyer from $145 in 2018 to $251 in Q1 2022.

Additionally, the freelance market is fragmented. Most freelancers are individuals doing their own gig, whereas Fiverr's ecosystem offers exposure, a pool of customers, and educational tools and services to help sellers.

Fiverr can attract more users to its system over time, expand its geographic presence, increase its gigs and services, go upmarket, and add new seller services. These can all play a part in growing revenue.

Long-term opportunity at a great price today

Growth may not come in a straight line, but the opportunity is there for Fiverr if it can execute over the long haul. The company estimates that its addressable market in the U.S. alone is $115 billion; compare that to Fiverr's 2021 revenue of $298 million, and you can see just how ample an opportunity it has.

You wouldn't know it by looking at the stock, which has fallen 90% from its high:

FVRR Chart

FVRR data by YCharts

The stock's plunge brings Fiverr's market cap to just $1.1 billion and more than $200 million of that is cash and marketable securities! This is a small company, yet it owns the digital freelancing space along with its most direct competitor, Upwork.

From a valuation standpoint, Fiverr's price-to-sales ratio (P/S) is now just 3.6 after soaring to more than 45 in 2021.

FVRR PS Ratio Chart

FVRR PS Ratio data by YCharts

Even if the valuation doesn't recover from here, which I think is unlikely because we are in a bear market for growth stocks, the company's organic growth alone could be enough to provide strong investment returns for long-term investors.

Fiverr is both cheap and has a small market cap, which can be a lucrative combination for a stock. Better yet, the ingredients are there for long-term growth, and a recession could kick Fiverr's business back into high gear.