An Analyst's Positives And Negatives On Fiverr

Fiverr international Ltd. FVRR, an online marketplace for freelance services company, began trading for the first time on a public market Thursday. MKM analysts offered their take from the sidelines.

The Thesis

Israel-based Fiverr's mission is to facilitate the buying and selling of digital services similar to physical goods on an e-commerce platform, MKM Partners' Rohit Kulkarni wrote in a note. The company is not profitable but its top line is growing almost twice as fast as comparable freelance platform Upwork Inc UPWK. Fiverr also boasts a higher take rate and gross margins compared to Upwork.

MKM didn't participated in the share offering but following Fiverr's roadshow presentation points to four positive attributes. These include:

  • A large addressable market as up to 162 million people in the U.S. and Europe assumed some form of independent work in 2016.
  • Millennials and Gen Z workers are likely to pursue multiple "gig" jobs at a time.
  • Fiverr has an international presence with 2.1 million active buyers and 255,000 active sellers across 160 countries.
  • Repeat buyer activity and an expanding network should lead to additional transactions.

On the other hand, three investment risks investors may want to consider include:

  • Competition from Upwork and others.
  • Macro risk from freelance companies classifying workers as contractors.
  • Fiverr will likely continue burning cash through 2021.

Price Action

Fiverr's stock closed its first day of trading at $39.90 per share. The IPO was priced at $21 per share.

Related Links:

Fiverr Opens For Trade Well Above IPO Price

Fiverr IPO: What You Need To Know

Photo courtesy of Fiverr.

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FVRRFiverr International Ltd
$29.23-2.31%

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