Over the past six months, Fiverr’s stock price fell to $29.31. Shareholders have lost 12.1% of their capital, disappointing when considering the S&P 500 was flat. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Following the drawdown, is now a good time to buy FVRR? Find out in our full research report, it’s free.
Why Does Fiverr Spark Debate?
Based in Tel Aviv, Fiverr (NYSE: FVRR) operates a fixed price global freelance marketplace for digital services.
Two Positive Attributes:
1. Eye-Popping Growth in Customer Spending
Average revenue per buyer (ARPB) is a critical metric to track because it measures how much the company earns in transaction fees from each buyer. This number also informs us about Fiverr’s take rate, which represents its pricing leverage over the ecosystem, or "cut" from each transaction.
Fiverr’s ARPB growth has been exceptional over the last two years, averaging 17.4%. Although its active buyers shrank during this time, the company’s ability to successfully increase monetization demonstrates its platform’s value for existing buyers. 
2. Outstanding Long-Term EPS Growth
We track the change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Fiverr’s EPS grew at an astounding 52.1% compounded annual growth rate over the last three years, higher than its 8.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
One Reason to be Careful:
Declining Active Buyers Reflect Product Weakness
As a gig economy marketplace, Fiverr generates revenue growth by expanding the number of services on its platform (e.g. rides, deliveries, freelance jobs) and raising the commission fee from each service provided.
Fiverr struggled with new customer acquisition over the last two years as its active buyers have declined by 6.6% annually to 3.54 million in the latest quarter. This performance isn't ideal because internet usage is secular, meaning there are typically unaddressed market opportunities. If Fiverr wants to accelerate growth, it likely needs to enhance the appeal of its current offerings or innovate with new products. 
Final Judgment
Fiverr’s positive characteristics outweigh the negatives. With the recent decline, the stock trades at 12.3× forward EV/EBITDA (or $29.31 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free.
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