Insights

Why Fiverr Stock Jumped on Thursday

What happened

Shares of gig marketplace Fiverr International (NYSE: FVRR) traded sharply higher on Thursday. The stock rose as much as 18.6% but was up about 6% as of 1:10 p.m. ET. Interestingly, however, these gains came after the stock was initially down about 7.5%.

Here’s what’s behind the stock’s volatility today.

So what

Fiverr’s move higher follows the tech company‘s second-quarter earnings report, which was released before market open on Thursday.

Shares initially likely traded lower because the company reported worse-than-expected second-quarter revenue. In addition, management lowered its full-year revenue outlook. But the market may have grown more bullish on the stock as it digested the implications of management’s strategic efforts to enhance profitability.

“Growth has and will always be our priority,” said Fiverr CEO Micha Kaufman in the company’s second-quarter earnings release. “However, with market conditions worse than anticipated, when growth becomes expensive, instead of growing at any cost, we decided to prioritize EBITDA and free cash flow, and accelerate the pace toward our long-term target model.”

Adjusted earnings per share for the period was $0.12 — ahead of a consensus analyst forecast for $0.09. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was also better than expected.

So what

For the full year, Fiverr expects revenue to grow 12% to 14% year over year to between $332 million and $340 million. It also expects adjusted EBITDA to be between $19.5 million and $21.5 million. Likely explaining the primary reason the stock is up on Thursday, this is significantly higher than management’s previous forecast for full-year adjusted EBITDA between $10 million and $17 million. 

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool has positions in and recommends Fiverr International. The Motley Fool has a disclosure policy.

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