Fiverr International Ltd (NYSE: FVRR) is one of the top 10 online marketplaces to find online jobs and freelancers. It is a popular name among freelancers around the globe. According to a bullish thesis on Reddit, Fiverr has some growth potential and has the ability to become the winning freelancing platform. The thesis, by a user Career_Regular, notes that Fiverr is an extremely attractive company that can easily increase its market cap of ~$7.2bn market cap by more than 10x in the future.
Fiverr connects freelancers and buyers. Buyers on the online marketplace can buy services across a variety of services ranging from one of eight verticals: Graphics & Design; Digital Marketing; Writing & Translation; Video & Animation; Music & Audio; Programming & Tech; Business; and Lifestyle. Fiverr charges buyers 5% and sellers 20%. The company benefits from network effects that could give it a competitive edge over competitors. Fiverr’s business is expected to grow in the coming days as more and more people and businesses are focusing on outsourcing small and large tasks like logo design, voice-overs, social media, and website building.
If Fiverr becomes the largest freelancing marketplace in the world, this business could be huge. Fiverr seems to be the winning marketplace but they have strong competition from Upwork and Toptal. Marketplaces benefit from network effects. As more buyers are on the platform, more sellers are attracted to using the platform, and vice versa. If Fiverr captures the leading market share in this industry, smaller competitors will be unable to compete with them.
Financial data suggests that Fiverr has some really great growth and COVID-19 has accelerated the revenue and GMV. However, like the early innings of many marketplaces, Fiverr has not been profitable in the last three annual years. The company’s GMV is growing nicely and its revenue has increased consistently over the past three years. In 2019, active Buyers were 2.4 million, versus 1.8 million in 2017.
Management expects the total market opportunity to be roughly $100bn. However, the whole work industry is in the trillions of dollars, according to the thesis.
If Fiverr were to continuously capture a small portion of this market for years and years to come, I think this industry could have a long runway of growth for Fiverr and for others competing in this industry.
The mega bull thesis is that the majority of online services are performed on Fiverr’s platform. If Amazon sells the majority of physical goods then Fiverr sells the majority of online services. That’s a strong statement to make, but I believe it’s not impossible.