Sean Williams, The Motley Fool
7 min read
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Though the bulls are running wild on Wall Street, not every stock has been a winner.
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Since peaking in February 2021, this online services marketplace has been battered by changing labor force dynamics and concerns about the rise of artificial intelligence.
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However, this inexpensive company is flush with cash, ideally positioned to take advantage of the new workplace norm, and has demonstrated exceptional pricing power.
For much of the last seven years, the bulls have been running wild on Wall Street. The benchmark S&P 500 has gained at least 16% in each of the previous three years, and for six of the last seven.
But outsize returns for Wall Street’s most widely followed index don’t mean all stocks have come along for the ride. Just ask investors in gig economy stock Fiverr International (NYSE: FVRR), who’ve watched their shares lose 95% of their value since peaking on Feb. 12, 2021.
With the stock market entering 2026 at its second priciest valuation in 155 years, according to the Shiller Price-to-Earnings (P/E) Ratio, finding bargains has become progressively more challenging. Like newly retired billionaire investor Warren Buffett, I’ve been selling more stocks than I’ve been buying for the past couple of years.
However, Fiverr International’s risk-versus-reward profile has shifted so far toward “reward” that not even a historically pricey stock market could keep me from recently doubling my stake.
Before diving into the laundry list of reasons I decided to double my position in Fiverr, it’s imperative to lay the foundation for how this online services marketplace stock got to where it is now. In other words, we need to examine both sides of the coin and understand the company’s inherent risks before attempting to quantify any potential reward.
One of the leading downside catalysts for Fiverr has been the end of the COVID-19 pandemic. When the global pandemic began, and workers were compelled to stay home to mitigate the spread of COVID-19, demand for freelance work exploded. But as it became clear that the worst of the pandemic was in the rearview mirror, some companies began bringing workers back into physical offices, thereby reducing the opportunities for freelancers on Fiverr’s online marketplace.
To build on this point, Fiverr has endured a multiyear decline in annual active buyers on its platform. With more workers returning to the office, annual active buyers have retraced from 4.2 million, as of Sept. 30, 2022, to 3.3 million in the comparable quarter three years later.
