What Happened:
Shares of online freelance marketplace Fiverr (NYSE:FVRR) jumped 5.8% in the morning session after Goldman Sachs analyst Eric Sheridan upgraded the stock's rating from Neutral to Buy and assigned a price target of $43. The price target implied a potential 66% upside from where shares traded when the upgrade was announced. Fiverr was the only technology stock that the analyst upgraded in a recent research note. Citing the reason for the upgrade, the analyst added that Fiverr "continues to position its platform and products for increased levels of personalization and matching capabilities, along with more complex projects, with many of those initiatives driven by AI."
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What is the market telling us:
Fiverr's shares are very volatile and over the last year have had 42 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 8 months ago, when the stock gained 10.9% on the news that the company reported first-quarter revenue that narrowly beat analysts' estimates. Fiverr also exceeded projections in key areas, including free cash flow, adjusted EBITDA, and earnings per share (EPS). Management reminded the market that it was the "highest quarterly adjusted EBITDA with double digit adjusted EBITDA margin, even as Q1 seasonally marks the heaviest investment outlay across the entire year." The company also raised full year guidance for revenue and adjusted EBITDA, both of which were better than expectations at the midpoint. Additionally, next quarter's revenue and adjusted EBITDA similarly beat. This was a nice "beat and raise" quarter for the company which should leave investors optimistic.
Fiverr is down 1% since the beginning of the year, and at $25.93 per share it is trading 44.5% below its 52-week high of $46.71 from February 2023. Investors who bought $1,000 worth of Fiverr's shares at the IPO in June 2019 would now be looking at an investment worth $649.87.
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