Why I think Fiverr’s stock will continue to outperform

When I bought the stock, it was not cheap. It had already had a significant run-up close to 500% or more since March. So yeah, I was super late to the party. But I don’t think this party is ending anytime soon. 

I think that Fiverr has a long way to run. 

In other words, this party is just getting started. 

I’m invested in Fiverr

I bought the stock when the price was in the $140s, going long in early October, and the position was a pretty decent size for me. It has had a good ride up so far.  And I just recently added to the position yesterday. 

As of this morning, it’s up close to 18 to 20%. That’s solid for less than a month of holding a stock. 

The prospects of how the stock will perform are looking very bright for Fiverr and anyone who holds a position.

Here’s why I think that.

Macro forces are favorable for Fiverr

We are increasingly in a digital world. People use websites more and more, not just to market their websites but to transact on them, communicate with their customers, create communities, etc. requiring a developer or designer or copywriter.

In the US alone, there are over 30 million small businesses. That’s not counting any of the other countries in the world. And that’s not including the larger businesses.

Also, people are starting businesses, amid the pandemic and the recession it caused, at a faster rate in more than a decade. 

And most of those businesses need someone to help them set up a website or a digital presence. And they won’t want to pay a company like mine or an agency to get that done for them—no. They will go to a small gig worker, a freelancer. 

They’ll go to Fiverr, or someplace like it. 

Fiverr’s a marketplace, which is a moat

They provide a marketplace for individuals and business owners to find freelancers to help them with their website or creative-services-needs that won’t break the bank. And that’s not the only thing that sets Fiverr apart.

Their prices are often otherworldly low. You can find a developer who is willing to put together a package that would build you a website for near to nothing, some for less than $100. It sounds absurd, but it’s true. There are all kinds of options for a scrappy small business owner.

Fiverr is a marketplace that isn’t just for the US, no. It’s for the world. Anyone who starts a business or has an established one can find a person to build an e-commerce website, produce a video, or design designs, create copywriting, etc.

And freelancers can find customers on Fiverr’s platform and work as they wish. They log into Fiverr from anywhere in the world, and they can be on their couch in their underwear or in a business suit at a high-rise office. They can be in a remote country or a first-world nation. It doesn’t matter. 

Fiverr also removes friction, which makes it a bigger moat

Fiverr is a two-way marketplace that connects freelancers with individuals and businesses, focusing on creating frictionless transactions. And that’s a magical place to be. This marketplace connects two different parties around a synergistic area. For Fiverr, that’s creative work. It essentially connects buyers with sellers and vice versa so they can do business and create something together. Fiverr makes it as easy as possible by removing friction on both sides.

Building a two-way marketplace is hard enough, but making it super frictionless is another. And it can make all of the difference.  

Look at Zoom. Zoom entered a space where huge incumbent companies were playing. You know, like Google and Microsoft. And many people and investors thought Zoom was crazy and didn’t think it could succeed. But they did. What set them apart was this. They were obsessed with making video conferencing easy to use. They focused on the user experience above all else. 

And because of that laser focus on the customer experience, they won. 

That’s what Fiverr has and is continuing to do. 

That’s why I believe they will continue to win. 

I’m betting on it. 


Disclosure: None of this is investment advice or the like. It’s just one investor sharing his learnings and stories. Consult a professional advisor if you want help in investing.


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Why I decided to buy Fiverr stock and not Upwork

On the surface, Fiverr and Upwork almost seem the same. But, they’re not.

Both help customers find freelancers to get a website designed or built or a video or some other creative work created. 

But if you dig deeper, that’s when you see the difference. And they’re meaningful. 

The differences between Upwork and Fiverr

Upwork helps you find talent, but there’s more friction when you use the site. To find what you’re looking for, first, you need to sign up for Upwork and answer a set of questions before getting anywhere. You can’t see anything helpful or the type of person you’re looking for until you go through their process. That’s annoying. And making people annoyed is not a great way to win customers. 

Fiver doesn’t do that at all. On the top of the home screen, there’s a search field, and anyone can type in they type of work they want help in, say CSS, and instantly you’re provided a list of people, with reviews and ratings, who’ve CSS’d for others, from which you can choose. It’s easy. And it’s instant. There’s little friction. 

And that’s critical. It’s the difference, really. Fiverr makes it easy for their customers to do what they came to do, which is find help. Removing friction is one of the most important things a tech company can do. And when they do, they unlock value that can scale incredibly fast. That’s one reason Fiverr’s stock and revenue are shooting up like a firework on Independence Day. Upwork’s revenue is up 19% in the second quarter year over year versus Fiverr’s 82% growth. That’s a meaningful difference.

The business model is also very different. Upwork has a subscription model with a classified labor site. Then they will offer bundled solutions. But Fiverr helps the customer find a freelancer as quickly as possible. 

And their monetization model is meaningfully divergent from Upwork’s, too. Fiverr just takes a percentage of the fee that is paid for the project. There’s no need for the customer to subscribe to their service or platform. No, they just find someone and start the work, and Fiverr’s fee is baked into the process, which doesn’t require the customer or the freelancer to do anything else other than to get to work and get things done.  

The power of the two-way marketplace

Fiverr and Upwork are also two-way marketplaces that source affordable talent globally and connect them with willing and hungry clients. But Fiverr is running away with the show. 

Year to date, their stock is now up over 500%. That’s a lot of zeros of performance for just twelve months. If you invested $10,000 in Fiverr stock a year ago, it would be worth around $60,000 today. 

And yes, that’s the stock I just bought yesterday, the one that’s already up 5X. 

You might be thinking, “John, buddy, that stock is way too expensive and it’s already had its run.” 

There is credence in what you say, especially if the stock drops drastically in the next several months, which it probably will. But the question is, When? We don’t know when it will drop, and how far it will continue to rise before it does. Instead, I think we should be looking at the fundamentals of this company and why if it has the power to sustain its growth. 

The industry is huge and growing

The fact is the freelance market these companies are working in is huge. Some say it’s $100 billion. But I think it’s bigger and will continue to grow. Upwork and Fiverr are opening up a larger market for freelancers. And once companies and individuals get more and more accustomed to this way of working, they will only use it more and allocate their resources accordingly. It will change the way business is conducted. So that $100 billion pie will become something much larger. 

Also, I know the creative industry. I have a creative agency. And, from my experience, businesses will always need talented people who are willing to help them with their creative needs. And once they see that they can get quality work on Fiverr, or Upwork, for a cheaper rate than domestic talent offers (much of the people who provide the work on those platforms are international), they won’t look back. In this video, a Youtuber shows how he found a couple of people to build him websites, one for $100, the other for $30. And he said that both of them were pretty good. Yeah, that’s right, thirty bucks, for a pretty good website. I’ve been in creative services for a decade now, and I have never, even in my most cash desperate days, ever thought about charging that little for a website. $30 is what I would spend on a business lunch. But that shows the power of Fiverr. It offers that type of value, where you can get a solid website for the same price you would spend for an overpriced sandwich. Since that’s the case, why wouldn’t more people use Fiverr? They’d be crazy not to. And if you can find that talent easily and reliably, it will only grow as a source for creative work. 

And not just that, two-way markets are incredibly hard to create. That’s when you connect the supply side with the demand. Airbnb, Amazon, Uber are all two-way marketplaces. Airbnb connects hosts to those who need hosting, Amazon sellers to buyers, Uber passengers with drivers. And they are huge and seemingly indomitable entities because they built a marketplace and reached an incredible scale so it’s hard for anyone else to really threaten them. And building them isn’t easy, and once they are built, they are very difficult to dislodge. Fiverr is one of those two-way markets. 

Now, since the total addressable market is enormous, $100 billion plus and growing, it allows for more than one player to grow comfortably. So Upwork and Fiverr can both exist as Uber and Lyft do. Duopolies can live fat and happy lives without killing each other. However, I do think that Fiverr can become the more dominant party here. They have the momentum and all of the right pieces going for them. 

Closing thoughts on Fiverr and Upwork

Yesterday, I actually invested in both Upwork and Fiverr. Then I started digging further into the differences. My company has used Upwork. And when I invested, I thought, “What’s the big difference?” Upwork actually seems to be the cheaper, in terms of stock price, than Fiverr. Upwork hasn’t had a 5X uptick in its stock price. But then I realized that Upwork didn’t have a huge revenue boost or the same trajectory or momentum either. So I sold out of my positions of Upwork. 

That doesn’t mean that Upwork can’t change and improve its customer experience model and design. But, for the time being, they haven’t. And the price of their stock represents that difference.

And that means the difference between me buying and holding one and selling the other. 

That’s why I’m long Fiverr. 

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