After Rallying More Than 700% in 2020, Is Fiverr Still a Buy?
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Headquartered in Tel Aviv, Israel, Fiverr International Ltd. (FVRR - Get Rating) operates an online global marketplace. Its platform enables sellers of services connect with buyers. The company’s platform connects businesses with freelancers offering digital services across eight verticals, namely graphic and design, digital marketing, writing and translation, video and animation, music and audio, programming and technology, business, and lifestyle.
The stock has rallied more than 779% so far this year. With a global digital transformation now happening at an accelerated pace, the stock is expected to keep gaining in the coming months.
The stock’s impressive performance and its potential upside, which is based on a few factors, have helped the stock earn a “Strong Buy” rating in our proprietary rating system.\
Here is how our proprietary POWR Ratings system evaluates FVRR:
Trade Grade: A
FVRR is currently trading above its 50-day and 200-day moving averages of $180.29 and $125.80, respectively, indicating an uptrend. Moreover, FVRR has gained more than 63% over the past three months, reflecting solid short-term bullishness.
The company’s top line has increased 87.8% year-over-year to $52.3 million for the third quarter ended September 30, 2020. This can be attributed to the company’s continued efficacy in driving new buyers to its platform. Active buyers on the platform increased 37% year-over-year to 3.1 million. And its gross profit increased 98.3% year-over-year to $43.6 million. An EPS of $0.12 surpassed the consensus estimate by 50%.
On November 18, FVRR announced that it expanded its international footprint in Latin America, with launches in Brazil and Mexico. By offering local payment solutions to users in countries, and with it the ability to communicate and interact in their native language, the company aims to drive more efficient buyer acquisition and conversion.
FYRE launched Fiverr Business on September 15. It is a subscription-based platform designed for corporate teams and departments to collaborate while managing projects with freelance contributors.
Buy & Hold Grade: A
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers, FVRR is well positioned. The stock is currently trading 2.3% below its 52-week high of $211.36, which it hit on November 27th.
FVRR made its stock market debut in June 2019. The company’s growth can be attributed largely to the expansion of its geographic footprint.
Peer Grade: B
MercadoLibre, Inc. (MELI - Get Rating) and Jumia Technologies AG (JMIA - Get Rating) are two other popular stocks in the regional e-commerce space with operations worldwide. FVRR comfortably beat the returns of these popular industry participants over the past year. MELI and JMIA gained 185%, and 588.3%, respectively, over the same period.
Industry Rank: A
The e-commerce revolution began before the pandemic, which gave it a significant boost thanks to the stay-at-home arrangements in necessitated. Companies offering digital services are expected to gain in the coming months as remote services become the default arrangement, driven by changing consumer behavior. This industry is expected to grow post pandemic as more people acquiesce to the convenience that the e-commerce platforms provide.
Overall POWR Rating: A (Strong Buy)
FVRR is rated “Strong Buy” due to its short- and long-term bullishness, solid growth prospects, and underlying industry strength, as determined by the four components of our overall POWR Rating.
FVRR has the potential to soar in the coming months despite gaining more than 779% so far this year, based on its continued business growth, favorable earnings and revenue outlook, and strong financials.
FVRR has an impressive earnings surprise history, with the company beating consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $256.69 million for the next year represents a 36.8% increase year-over-year. Its EPS is expected to grow at 156.7% next year. This outlook should keep FVRR’s price momentum alive in the near term.
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FVRR shares were unchanged in after-hours trading Tuesday. Year-to-date, FVRR has gained 775.96%, versus a 16.48% rise in the benchmark S&P 500 index during the same period.