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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