Why Fiverr Stock Was Down Nearly 10% Today – The Motley Fool

0
110

Returns as of 02/19/2022
Returns as of 02/19/2022
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Motley Fool Issues Rare “All In” Buy Alert
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
Shares of freelancing platform Fiverr ( FVRR -9.90% ) finished the day down 9.8% after reporting a strong finish to 2021 but issuing preliminary guidance for 2022 that disappointed some investors. Few have wanted to touch this stock after it exploded higher in 2020. Shares are now down nearly 80% from their all-time high reached early in 2021.  
Image source: Getty Images.
Fiverr actually put up great numbers in the fourth quarter of 2021, posting full-year sales growth of 57%. It was also free cash flow positive when excluding the acquisition of fellow freelance work company Stoke Talent. Free cash flow was $36.3 million, up 142% from 2020 and good for a free cash flow profit margin of 12%. Not bad for a company spending heavily to maximize expansion.  
The market has been brutal as of late, though, with focus shifting to an impending raise in interest rates at the Federal Reserve, likely to begin in March. Higher interest rates lower the present value of stocks. Add in Fiverr’s guidance for sales to increase “only” 25% to 27% in 2022, and some investors are feeling jittery.  
Dismal stock-price performance aside, it’s becoming increasingly clear that remote work has permanently altered the global workforce. Fiverr is capitalizing on the trend and enabling connections between millions of workers and businesses that need more flexibility in hiring. Slowdown or not, Fiverr’s growth story remains intact.
The question now is whether you’re willing to pay up for this growth story. Even after the severe punishment doled out to Fiverr, shares trade for 9 times trailing 12-month sales and almost 80 times trailing 12-month free cash flow. High-growth but premium-priced stocks are out of favor at the moment, and there’s no telling how long that will last. If you buy in right now, do so because you think Fiverr is still in prime position in a new era of remote and flexible work.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool’s premium services.

Making the world smarter, happier, and richer.

Market data powered by Xignite.

source