It’s no secret that the stock market has been on a bit of a roller coaster ride lately. But one stock that has taken a particularly hard hit is Fiverr International Ltd. (NYSE: FVRR).
Fiverr is a global online marketplace that connects businesses with freelancers offering services in more than 300 categories, including digital marketing, graphic design, web development, and more.
The company went public in 2019 and was one of the hottest IPOs of the year. But since then, the stock has struggled to find its footing and is down nearly 60% from its all-time high.
So what’s behind the sharp sell-off in Fiverr’s stock? Let’s take a closer look.
A string of disappointing earnings reports
Fiverr has missed Wall Street’s earnings expectations in three out of four quarters since going public. In its most recent quarter, the company posted an adjusted loss of $0.16 per share, wider than the $0.11 per share loss that analysts were expecting.
Revenue came in at $86.7 million, up 46% year-over-year but still below analysts’ estimates of $88.5 million. Fiverr also issued soft guidance for the current quarter, calling for revenue in the range of $88 million to $90 million, compared to analysts’ expectations of $92.
First, the company announced that it was reducing its fees for some services. This means that users will earn less money for each service they provide. This may have caused some users to leave the platform.
Second, there have been concerns about the quality of services on Fiverr. Some users have complained that they have received poor quality work or that they have been scammed by other users.
If you are thinking about using Fiverr, be sure to do your research first. Make sure you understand how the platform works and read reviews from other users before you purchase any services.
The COVID-19 pandemic
Like many other companies, Fiverr has been hurt by the COVID-19 pandemic. The company said that it saw a significant slowdown in March as businesses around the world cut back on spending in response to the pandemic.
Fiverr has since seen some improvement, but it still expects the pandemic to have a “material” impact on its business in the second quarter. The company said it is seeing increased demand for certain categories like video editing and 3D rendering, but offset by weakness in other categories like event planning and real estate photography.
A shift in investor sentiment
Another factor weighing on Fiverr’s stock is a change in investor sentiment towards high-growth tech stocks. After soaring to new highs in February, shares of companies like Fiverr have come under pressure as investors rotate out of growth stocks and into value stocks.
