FVRR - Fiverr: Undervalued Amid The Growing AI-Powered Freelance Economy
2024-04-02 16:35:45 ET
Summary
- Cash is now a competitive asset, and rising interest rates are causing companies to focus on reducing debt and increasing profit margins.
- Fiverr, a growth firm, has seen its value decline due to a decline in sales growth, but its focus on higher profit margins is more critical today.
- Fiverr faces potential competitive threats and risks from AI, but its dominance in the freelancer marketplace may secure its position.
- AI may be a significant net benefit for the company as it creates more freelance job opportunities that it renders obsolete.
- With excellent growth potential, a healthy balance sheet, and a forward P/E below 10X, FVRR is among my favorite GARP stocks today.
Since the rise in interest rates in 2022, a key factor has shifted in financial markets: cash is now worth something. Cash is a competitive asset, offering over 5% risk-free when many riskier bonds and dividend stocks hardly pay more. Before 2022, ultra-low rates encouraged companies to burn through cash, take on debt, and incentivize higher-growth investments. Companies and investors could afford to focus on long-term profits without much emphasis on balance sheets and short-term cash-flows, giving way to the rise of many chronically negative cash-flow "growth" stocks....
Fiverr: Undervalued Amid The Growing AI-Powered Freelance Economy