What happened

Shares of Fiverr International (FVRR 0.25%) fell 6.7% in July 2022, according to data from S&P Global Market Intelligence. That was a significant drop in a month where the S&P 500 market index posted a gain of 9.1%. The stock was running neck and neck with the broader market through most of the month, stumbling on July 26 after the freelance marketplace operator announced a hefty round of layoffs. The stock closed 9.9% lower that day.

So what

The company parted ways with 60 employees in late July, reducing its global workforce by roughly 8%. Management explained that Fiverr is adjusting its expenses to sudden changes in the macroeconomic picture. Later, executives said that economic headwinds were worse than expected and it seemed prudent to pump the brakes on Fiverr's ambition to deliver skyrocketing growth "at any cost."

Investors took this pullback from extreme growth ambitions as a bad sign for Fiverr's long-term prospects.

Now what

The market pain didn't last long, though. Fiverr posted second-quarter earnings on Aug. 4. The actual results were a mixed bag, with strong earnings and mildly disappointing revenue, but Fiverr's management also took the time to double down on the company's commitment to long-term growth.

"We felt that it was the prudent decision to prioritize EBITDA and free cash flow, accelerate the pace toward the long-term target model," CEO Micha Kaufman said on the earnings call. He continued:

I think that this would put us in a strong financial position to double down on growth investments when the market condition improves. So that was the basis for our decision. It doesn't mean that we stopped prioritizing growth. It will always be a priority for us, but we don't think that it should come at any cost.

Fiverr's stock rose 8.6% that day alone. Today, the stock has gained a total of 21% since the start of July.

As a high-octane growth stock, Fiverr's shares should be valued on the company's growth prospects in the long run. The company is aimed at the massive market of freelancing services on a global scale, and Fiverr has barely scratched the surface of its long-term prospects.

Many investors seem to have given up on this company in recent quarters, treating it as a one-hit wonder with limited business potential after the coronavirus pandemic. That bearish thinking strikes me as a big mistake, because Fiverr is a leader in the so-called gig economy, which received a boost from COVID-19 but is also permanently reshaping the world of work and the value of freelancing services.

I doubled down on my own Fiverr investment in early June. I would have grabbed some more in late July if The Motley Fool's disclosure policy had let me. So I'll wait and see what this volatile stock is up to when I'm allowed to touch it again. In a world without those ironclad trading restrictions, I'd be buying more Fiverr shares today. Maybe you should consider that idea, too.