What happened

Shares of Fiverr International (FVRR 0.24%) soared as much as 39% this week, according to data from S&P Global Market Intelligence. The global online marketplace for freelance services posted better-than-expected earnings for the third quarter. As of 12:04 p.m. ET on Friday, Nov. 11, shares are up 35.9% this week.

So what

On Nov. 9, Fiverr reported earnings for the three months ending in September. Revenue grew 11% year over year to $82.5 million and adjusted earnings per share (EPS) came in at $0.21. This revenue number exceeded analyst expectations by 1.7% while the adjusted EPS beat by 28%, which is a key reason why shares are up this week. 

For the full year, Fiverr reaffirmed its prior guidance and expects revenue of $334 million to $340 million in 2022. On top of the earnings beat, this likely calmed down any nervous investors who are afraid of what will happen to worker demand on Fiverr's freelance marketplace if the global economy heads into a downturn.

In other news, technology and software stocks were soaring this week on the back of an inflation report that showed slowing consumer price increases in October. The Nasdaq-100 index was up 7% this week, for reference. Internet stocks like Fiverr trade in correlation with the Nasdaq-100, which likely gave a boost to Fiverr's stock this week on top of its strong earnings.

Lastly, investors shouldn't count out the impact of short-sellers on Fiverr's rapid stock price movements. Third parties estimate that around 10% of Fiverr's outstanding stock was borrowed to sell short, which means those traders are betting that the stock will go down. When a stock soars higher after something like an earnings beat, short-sellers will sometimes buy back their shares, creating further upward pressure on the stock price in a phenomenon known as a short squeeze.

Now what

Even after this pop, Fiverr's stock is still down a large amount over the past year, around 80%. Investors have soured on pandemic winners like Fiverr that do not generate much in profits for shareholders. Today, it has a market cap of $1.4 billion, which is not too expensive compared to its full-year revenue guidance of $340 million, especially when you consider the company has grown its revenue by 330% since going public in 2019.

If you are still a believer in this business over the long term, there's no reason to avoid buying shares today, even after this weekly pop.