What happened
Shares of Fiverr International (FVRR +1.30%) fell sharply Tuesday even though there was no news out relating to the freelancer hiring marketplace.
Instead, the stock headed lower over the course of the session, seemingly in sympathy with Chegg (CHGG 3.55%) as the education stock tumbled by 48% after it said in its earnings call that new customer growth had slowed in the first quarter due to a spike of interest in ChatGPT.
Fiverr operates in an entirely different industry from Chegg, but as a platform frequently used to hire people for tasks like copywriting, content writing, and coding, it's also seen as being vulnerable to the new chatbot technology.
As a result, Fiverr closed the session down by 14.6%. Rival Upwork (UPWK +2.01%) also fell by 7.8%.
Image source: Getty Images.
So what
The arrival of ChatGPT seems to be both a risk and an opportunity for Fiverr. The company has said that demand for AI-related services has been "explosive," and that's likely to continue as more businesses embrace the new generative AI tools.
However, the AI chatbot also poses a threat to Fiverr in a number of ways. First, many of the tasks that employers turn to Fiverr for may be disrupted by generative AI technology, making hiring someone through its platform unnecessary.
Additionally, employers who find freelancers via Fiverr also face the risk that those they hire for work like content writing will pass off ChatGPT output as their own. Notably, Fiverr and Upwork have both reported that their clients are being deluged with cookie-cutter project proposals cranked out by ChatGPT.
NYSE: FVRR
Key Data Points
Now what
Chegg may have been the first domino to fall in the ChatGPT disruption, but there will likely be more.
It's still unclear just how much Fiverr will be affected given that it competes in a different industry from Chegg. We'll start to get a better idea when Fiverr reports earnings next week. Analysts are expecting its revenue to rise 1.1% to $87.7 million and for adjusted earnings per share to jump from $0.11 to $0.24 in the May 11 report.
Investors will be keen to hear any commentary management has to offer on ChatGPT in the report or on the earnings call, and the stock is likely to move on that as a result.
