IPO

After Quiet Period, Sell Side Mixed on Fiverr 

Fiverr, an online marketplace for freelance services, is seeing waves of red ink as international stock is trading lower, but riding a sea change in the employment picture, might the tide turn for the company?

The IPO has come and gone. And with the end of the “quiet period” that marks the several weeks after the public debut on the markets, Fiverr has seen the first spate of sell-side coverage, as Bloomberg reports.

The reception thus far has been mixed, although as the newswire noted, the company is regarded as being well positioned amid the shifts that mark the gig economy.

In at least one note, that from JMP, analysts cited a McKinsey study that estimates that as much as 50 percent of workers in the United States are expected to be freelancing by 2027. JMP estimated the total addressable market at $160 billion.

Separately, as reported in this space, PYMNTS and Hyperwallet have estimated that more than 38 percent of non-seasonal gig workers have sourced their project-based work through digital online marketplaces. It’s big business, as the U.S. gig workers have accounted for more than $1.4 trillion in income as of last year. Roughly 19 percent of gig workers, in fact, used the gig economy as their sole source of employment.

Amid that sanguine, larger, macro-driven backdrop, the sell-side notes cited by Bloomberg also show a bit of caution. In one instance, UBS has said that “given the early stage nature of this industry,” profitability remains elusive — and Citi has said investors should be patient as they wait for breakeven.

All told, the stock now has elicited three buy ratings and four holds thus far. Drilling down a bit, Needham, with a buy rating, estimated in a note penned by Senior Analyst Brad Erickson that the shift to the gig economy represents a “secular narrative,” and yet cautioned that “the company’s current loss-making profile may invite questions around customer acquisition efficiency.”

With a neutral rating, JPMorgan took note of the company’s scale at 2.1 million active buyers and 255,000 active sellers spanning more than 200 categories, and where friction is removed from matching the two groups.

Fiverr shares surged in the wake of their IPO last month, pricing its shares at $21, debuting at $26, and finishing trading at nearly $40, before declining to recent levels at around $26.20. The company reported a net loss of $36.1 million on revenues of $75.5 million last year.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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