Fiverr Cut to Sell as MKM Sees 'Feverish Valuation'

Freelancer marketplace Fiverr is trading at 36 times expected fiscal 2021 revenue. It's a 'rare-air premium valuation,' MKM says, cutting the stock to sell.
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Fiverr  (FVRR) - Get Report shares fell on Tuesday after MKM Partners analyst Rohit Kulkarni cut his rating on the online freelance marketplace to sell from neutral based on “feverish valuation levels.”

Still, he raised his target price to $185 from $145 to reflect recent market activity. 

Fiverr recently traded at $217.70, down 7.6%. It has jumped by a factor of more than eight over the past year.

It’s trading at 36 times expected fiscal 2021 revenue, an “extremely rare-air premium valuation,” Kulkarni wrote in a commentary cited by Bloomberg. The market valuation surpasses the “historical peak of any other internet marketplace in recent times.”

Kulkarni remains bullish on Fiverr for the long run. 

The pandemic has sparked an increase in freelancing, but Fiverr may face strong competitors, he said.

Last week, UBS downgraded Fiverr to sell from neutral. “We see risk/reward on the stock skewed to the downside from current levels when measuring valuation against implied growth,” the analysts said.

“While we see runway to grow/scale against key secular themes, we believe execution and supportive broader market dynamics will be more critical than ever in the face of tough comps as we progress through 2021 and premium valuation relative to peers.”

Earlier this month, Fiverr said it was running its first-ever Super Bowl ad during the Feb. 7 game:

“This new ad will be an evolution of the company's recently launched campaign, It Starts Here, … focused on small- and medium-sized businesses.”

In the third quarter the company’s net loss shrank to $500,000, or 1 cent a share, from $8.4 million, or 26 cents, in the year-earlier quarter. Revenue soared 88% to $52.3 million.