Fiverr’s shares have lost most of their value since the company’s June IPO.
Fiverr first made its market debut in June with mixed results for investors. The company’s shares rose to a 52-week high of $44.25, which is more than double its IPO price.
But since then, the company’s shares have steadily lost most of their value, and the stock is currently trading near its $21 IPO price. So this begs the question: Is Fiverr still worth investing in?
4 things to know about Fiverr
Investing in a newly public company is always a gamble, but the long-term rewards could be worth it. Here are four things you need to know before investing in Fiverr.
1. The company is growing quickly
During Fiverr’s most recent earnings report, the company reported year-over-year revenue growth of 42%. And this earnings report was no fluke. In 2018, the company’s revenue grew by 45% from a year earlier.
2. The gig economy is just getting started
Fiver’s success is based on the incredible growth of the gig economy. At one point, freelancers were considered just a hop, skip, and a jump away from unemployment.
But now, becoming a freelancer is seen as a viable career path for millions of people. The gig economy grew by more than 10% from 2005 to 2015. And it’s expected that the number of freelance workers will grow from 3.9 million in 2016 to 9.2 million by 2021.
3. Fiverr’s user base continues to increase
Fiverr earns money by charging a fee for every job completed through its platform. And its revenue growth is thanks to more people using the platform and spending more money.
The company’s user base grew by 16%, and its buyers continue to spend more money. Most recently, the company expanded into Germany, which should help fuel even more growth.
4. The company is not yet profitable
It should be noted that Fiverr is not yet profitable. Like many fast-growing startups, company management is prioritizing growth over profitability. However, the company continues to exceed revenue expectations, so this may be worth it in the long run.
Given the success of the gig economy and the growing number of people who want to be freelancers, Fiverr could be a great long-term investment.
The company’s revenue growth is strong, and it continues to bring on new users and drive up the average price per gig. However, it could take a while for the company to reach profitability.