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Fiverr international (NYSE:FVRR) stocks plummeted 15% during afternoon trading Thursday after a mixed fourth-quarter 2023 earnings report and a year of uncertainty in the freelance industry.
Fiverr was downgraded to Neutral from Overweight by Piper senior research analyst Matt Farrell Sandler. The target price was also reduced from $30 to $25.
“Although we were cautious when we released the release, the 2024 miss was much higher than we expected,” Farrell noted.
The outlook for the current quarter turned out to be short. Fiverr expects revenue of $91.5 million to $93.5 million versus consensus of $97.34 million.
While Fiverr’s Q4 2023 earnings per share of $0.56 beat consensus estimates by $0.07, its revenue of $91.5 million fell short of expectations by 1 .05 million dollars.
“The decline in simple services, down 17% year-on-year in 2023, concerns us and, without a turning point in the macroeconomic picture, we suspect they will remain a headwind in the coming quarters,” Farrell added.
However, Fiverr still has long-term opportunities and an impressive profitability profile, according to Piper Sandler.
Fiverr CEO Micha Kaufman acknowledged the problems his company faces during Wednesday’s earnings call.
“We entered 2023 amid a challenging macroeconomic environment, weak SME sentiment, and waves of layoffs and hiring freezes across industries,” Kaufman said. “It was also a year of growing geopolitical uncertainties, with the ongoing war in Ukraine and the onset of war in the Middle East.”
Fiverr began introducing generative AI to its services last year. Kaufman estimates that AI has created a 4% net positive impact on the company.
Based in Israel, Fiverr’s online platform connects freelancers with companies looking for help.
Seeking Alpha analysts rate Fiverr a HOLD, while Wall Street rates it a BUY. Looking at Alpha’s quantitative system, which regularly beats the market, he rates it HOLD.