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Bear of the Day: Fiverr (FVRR)

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Fiverr International Ltd. FVRR grew quickly during the pandemic. However, this Zacks Rank #5 (Strong Sell) is seeing a slowdown as the economy reopens and people spend less time on their screens.

Fiverr operates a platform that connects businesses with skilled freelancers offering digital services in more than 500 categories, across 9 verticals including graphic design, digital marketing, programming, video and animation.

Through June 30, 2021, 4 million customers bought services from freelancers across more than 160 countries.

Another Beat in the Second Quarter

On Aug 5, Fiverr reported its second quarter results and beat on the Zacks Consensus by $0.06. Earnings were $0.19 compared to the Zacks Consensus of $0.13.

It hasn't missed since its 2019 IPO.

That's an impressive track record, especially during a pandemic.

But Fiverr was a pandemic "winner" as work-from-home exploded.

Revenue rose 60% year-over-year in the second quarter to $75.3 million.

Active buyers jumped 43% to 4 million as of June 30, 2021, from 2.8 million as of June 30 a year ago.

Those buyers were also spending more. Spend per buyer rose to $226 from $184 in the prior year's quarter, a gain of 23%.

Third Quarter Guidance Disappoints

Despite a strong second quarter, Fiverr said it saw a change in behavior at the start of the third quarter as the restrictions were lifted and the economy reopened.

People were spending more time outside of the house.

It translated into more modest new customer cohorts and less activity for older cohorts.

Fiverr guided revenue in the range of $68 million to $72 million, a sequential quarterly decline.

The analysts never like hearing that.

As a result, they have cut their 2021 and 2022 earnings estimates.

The Zacks Consensus Estimate for 2021 has fallen to a loss of $0.13 from $0.21 just a month ago. That's an earnings decline of 145% as the company made $0.29 last year.

The 2022 Zacks Consensus Estimate has declined to $0.77 from $1.05 during the last month.

Sales are still expected to rise to $285 million, up 51% year-over-year.

Shares Plunge in the Last Month

Fiverr shares soared during 2020 as revenue grew but 2021 has been a rocky road.

Over the last year, shares have gained 55%. But in 2021, they have fallen 14.5% and have lost 21% over the last month, since it warned about the slowdown.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

But if you are an investor who is buying the analysts' belief that the company could return to positive earnings in 2022, then could this be a buying opportunity?

Revenue is expected to be up 51% this year and another 34% in 2022.

Investors interested in the "future of work" and the creator economy, might want to keep an eye on Fiverr for further weakness and a change in the Zacks Rank.

It could be a chance to get it for much cheaper.


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