Editor’s note: This column is part of InvestorPlace.com’s Best Stocks for 2021 contest. Louis Navellier’s pick for the contest is Fiverr International (NYSE:FVRR) stock.
FVRR stock has been struggling of late, but the core reason is somewhat ironic. It’s because the pandemic is fading.
The U.S. added just 194,000 jobs in September, while the lowest expectation was 200,000. And the previous few months weren’t all that impressive either. This led Fiverr leadership to observe on their second-quarter earnings in August that some of the issue is the fact that many of its scores of freelance talent were finally taking a break from their screens.
Analysts had bullish numbers on growth for the second half of the year, but those statements from management cool their ardor and they’re buying. Currently, FVRR stock is down about 9% year-to-date (YTD) after a rip-roaring start. How did we get here, and where are we going? Let’s dive in and take a closer look.
The FVRR Stock Dilemma
There are two distinct schools of thought with FVRR stock. The first is, FVRR stock is well-positioned as the global leader in freelance services to dominate the growing gig economy market.
This is especially true post-pandemic as many workers see gig work from a better alternative than heading back into the office. Also, with the high costs of childcare in the U.S., it’s a great opportunity for a stay-at-home spouse to contribute financially without having to pay out for childcare.
Moreover, the other side of the coin is FVRR stock is getting to the point where its growth may not be the story, but how it manages this slow growth period. There’s rising competition, and younger workers are reevaluating their job prospects. Plus, workers are in high demand, so full-time work is easier to find, and the terms are more flexible.
New Opportunities
Bear in mind, FVRR stock has a market capitalization of $6.5 billion. And it has a real business with revenue and earnings. There are electric vehicle (EV) makers our there with market caps that are 10 times that without a single car or truck rolling off the production line.
At that size, Fiverr can find more growth opportunities in sectors that broaden its revenue base. And it recently did that with its announcement it’s buying Seattle-based CreativeLive, a online educational firm that has classes for creatives looking to build careers from their talents. In turn, this fits perfectly with FVRR stock’s ultimate mission and adds a feeder business to the overall organization. Teach creatives how to take their talents pro, then give them the professional opportunities to realize their ambitions.
Also, with the stock down and the company looking for growth, it would be a good time for a big player like Microsoft (NASDAQ:MSFT) to buy Fiverr and build it into its LinkedIn platform as part of a subscription model.
The Current Quandary for FVRR Stock
While I added this to my Best Stocks list at the beginning of the year, it’s currently sitting with a “D” rating in my Portfolio Grader.
Once again, there’s still a lot to like in FVRR stock, and there’s potential along with impressive performance. However, this is post-pandemic economic situation is more complex than expected and stock that should be performing well are grappling with unseen issues.
At this point, if your plan is to hold FVRR stock for the rest of 2021, let’s see how shares perform after the company reports its Q3 earnings. However, with FVRR stock’s downgrade in my Portfolio Grader, now is not the time to buy shares.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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