Fiverr Stock Up 15% Today – Time to Buy FVRR Stock?

The price of Fiverr stock is jumping 15% this morning in pre-market stock trading action following the release of the company’s earnings report for the third quarter of 2021 as the gig-economy business beat revenue and earnings estimates for the quarter while the management also ramped up its guidance for the full year.

For the three months ended on 30 September, Fiverr reported total revenues of $74.3 million resulting in a 42% jump compared to the same period a year ago as a result of an increase in the number of active buyers, a higher take rate, and higher average spending per buyer. Analysts had estimated revenues of $71.1 million for the period.

Active buyers increased by a million or 33% above the figure reported a year ago at 4.1 million while the amount spent per buyer rose 20% from $195 to $234. Meanwhile, the company’s take rate experienced a 140 basis point year-on-year increase at 28.4% compared to a year ago.

Meanwhile, Fiverr’s adjusted EBITDA experienced a 74% year-on-year jump at $7.3 million resulting in a 180 basis points improvement in its adjusted EBITDA margin, which ended the period at 9.8%.

Non-GAAP net earnings per share jumped by 6 cents compared to a year ago at $0.19 per share and this figure exceeded analysts’ forecasted figure of $0.02 per share for the quarter. This pronounced earnings beat is probably the reason why Fiverr stock is going up in pre-market action today.

Finally, the management raised its guidance for the full 2021 fiscal year to $292.4 to $295.4 million compared to a previous range of $280 to $288 million.

Can today’s positive earnings report result in a full-blown reversal of the downtrend that Fiverr stock has experienced lately? In this article, I’ll attempt to answer that question upon assessing the price action and fundamentals of the company.

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Fiverr Stock – Technical Analysis

Back in October when I last wrote about Fiverr I emphasized that the stock’s ability to remain above its short-term moving averages was going to be the definite signal that an uptrend may have started after a break occurred in the last few weeks of that month.

Since the price moved below these thresholds in the days that followed, this bullish thesis was invalidated and that led to a decline in the stock price until the $153 support area was tagged just two days ago.

Today’s pre-market uptick is resulting in a conclusive bounce off this support and that reinforces a bullish outlook for the stock on the back of a potential double-bottom formation.

Double bottoms are powerful bullish setups that typically lead to a sizable jump in the price of the asset.

That said, today’s pre-market jump is stopping at $184 per share – a level that is right below the stock’s 50-day simple moving average. Same as before, unless the price breaks above its short-term means and moves above it in the next few days, this bullish thesis won’t be fully confirmed.

For now, the outlook for FVRR stock is bullish if that break does happen and today’s positive earnings report has the power to catalyze such a move. If that occurs, it would be plausible to expect that bulls will move to close what remains of the August bearish price gap, meaning that a target can be set for Fiverr at $225 per share. This results in a 22% potential upside based on the indicated opening price of $184 for Fiverr stock this morning.

Fiverr Stock – Fundamental Analysis

Even though the indicated annual jump in Fiverr’s revenues this year is not as strong as the uptick that the firm’s top-line experienced last year as a result of the pandemic, the performance of the company is still quite encouraging.

In this regard, Fiverr’s revenues are expected to advance 55% by the end of 2021 compared to a year ago and its profit margins have been steadily increasing as indicated by its forecasted 7.1% adjusted EBITDA figure.

However, today’s pre-market jump is pushing the firm’s valuation to $6.8 billion resulting in a price-to-sales ratio of 23x based on 2021’s annual revenue estimates.

This valuation multiple is particularly high compared to the average for software firms of around 15x to 11x and it creates room for further declines in the price down the line despite today’s positive results.

Overall, Fiverr displays all of the characteristics of a promising growth stock but the valuation remains quite stretched and may not justify taking a long position despite the overly optimistic attitude that the market is displaying at the moment.

For those who would like to enter a long position at a more advantageous price point, it would be a good idea to be patient until another decline like the one seen in August occurs. Given the firm’s above-average valuation multiple, the occurrence of such a decline is not unlikely at all.

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