What happened
Shares of Fiverr International (FVRR 2.13%) roared higher Thursday, surging as much as 17.5%. By the end of the day, the stock was still up 17.3%.
While the broader market rally was no doubt a contributing factor, the company continued to ride the wave of its robust third-quarter financial results, as well as the bullish commentary from a Wall Street analyst.
NYSE: FVRR
Key Data Points
So what
After Fiverr's well-received quarterly report, Piper Sandler analyst Matt Farrell had plenty of positive things to say. He noted the company executed very well, particularly in light of the current macroeconomic challenges.
Farrell argues that for the first time in several quarters, there won't be a significant adjustment to analysts' expectations. Further, the company's margin expansion plans are "very much on track." His view is further buoyed by Fiverr's execution on an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) basis, which will be viewed "very positively by investors."
Given the magnitude of the gig-economy stock's move higher today, that was a prescient call by Farrell. He went on to note that when the economy improves, Fiverr "appears to be ready to strike," he wrote.
Now what
During the pandemic-related lockdowns last year, Fiverr's growth exploded higher, resulting in really tough comparisons in 2022. The current outlook is suffering at the hands of near 40-year-high inflation, rising interest rates, and macroeconomic insecurity.
Fortunately, Fiverr's management was in the enviable position to see the downturn coming since the company has its finger on the pulse of workforce demand. This helped Fiverr focus on cost controls to shore up its cash position and fortify its balance sheet for the coming turbulence.
The gig economy is only just getting started, and Fiverr estimates its total addressable market in the U.S. alone at roughly $247 billion. Fiverr's revenue of just $298 million last year helps to illustrate the long runway that remains.
Furthermore, Fiverr stock is down 81% from last-year's high -- even after today's pop -- with a commensurate adjustment to the company's valuation. The stock is currently selling at a very reasonable 3 times next year's sales. This gives investors the opportunity to pick up shares of this next-generation freelance marketplace for a song.
