Shares of Fiverr International (NYSE: FVRR) gained nearly 18% across the past week of trading, according to data from S&P Global Market Intelligence. There wasn’t any major business-specific news for the gig-labor marketplace company, but its stock climbed in conjunction with the broader market’s rally.
Despite kicking off the week with a day of big sell-offs on Monday, stocks rebounded in subsequent trading. The S&P 500 and Nasdaq Composite indexes closed the week out up roughly 2% and 5.2%, respectively, and Fiverr benefited from the positive market momentum.
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The market’s read on risk factors including inflation and pandemic-related challenges has fluctuated in recent weeks, and growth-dependent technology stocks have been particularly volatile. Through the week of trading spanning from July 12 through July 16, Fiverr stock fell 12.6% as investors weighed risks posed by faster-than-expected inflation reported in the Consumer Price Index report from the Bureau of Labor and Statistics. Investors apparently didn’t need long to digest these concerns, and resurgent market momentum pushed Fiverr higher last week.
I own shares of Fiverr International in my portfolio and continue to like the company’s long-term growth prospects. The gig economy has surged over the last decade, but it still has huge room for growth. Hiring on a one-time or contract basis provides businesses with extra flexibility in many cases, and it can also boost profitability by reducing expenses related to employee benefits, payroll taxes, and other factors.
On the other hand, I also think that investors should approach the stock with the understanding that it’s a high-risk, high-reward play. In addition to the possibility that larger tech players will make a bigger push in the gig marketplace space, Fiverr could face roadblocks stemming from new regulatory developments, and the stock continues to trade at a growth-dependent valuation.
The company now has a market capitalization of roughly $8.6 billion and is valued at 28 times this year’s expected sales.
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