What Happened?
Shares of online freelance marketplace Fiverr (NYSE: FVRR) jumped 2.3% in the morning session after the company announced a major restructuring to become an "AI-first" company, a move that included laying off about 30% of its workforce.
The freelance services marketplace let go of approximately 250 employees as part of what its CEO, Micha Kaufman, called a "painful reset." The goal of this transformation was to create a smaller, flatter organization by using artificial intelligence to automate workflows and speed up decision-making. While large-scale layoffs often trouble investors, the market reacted positively to this news. The strategic shift was not viewed merely as a cost-cutting measure but as an investment in growth, particularly in AI applications and enterprise products. Investors appeared to embrace the pivot, betting that rebuilding the platform around AI tools would lead to greater efficiency and a stronger competitive position in the future.
After the initial pop the shares cooled down to $24.97, up 2.5% from previous close.
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What Is The Market Telling Us
Fiverr’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock gained 24.3% on the news that the company reported a "beat and raise" quarter.
Third-quarter earnings beat analysts' revenue, EBITDA, and EPS expectations. Efforts to improve value-added services paid off as take rate improved and the average spend per buyer rose 9% from the prior year. Notably, Fiverr introduced an AI-powered matching tool for buyers with complex job requirements. As a result, the number of buyers spending over $10K on Fiverr also increased.
Given these improvements, the company was able to comfortably raise full-year revenue and EBITDA guidance, which put the business on track to meet and perhaps exceed the three-year targets on Adjusted EBITDA and free cash flow provided in the previous quarter. Holding aside expectations, its number of buyers declined, which is a negative. Overall, though, this quarter was solid.
Fiverr is down 22.1% since the beginning of the year, and at $24.97 per share, it is trading 29.6% below its 52-week high of $35.45 from December 2024. Investors who bought $1,000 worth of Fiverr’s shares 5 years ago would now be looking at an investment worth $202.27.
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