Did The Underlying Business Drive Fiverr International's (NYSE:FVRR) Lovely 387% Share Price Gain?

By
Simply Wall St
Published
August 11, 2020
NYSE:FVRR

Active investing isn't easy, but for those that do it, the aim is to find the best companies to buy, and to profit handsomely. While not every stock performs well, when investors win, they can win big. For example, the Fiverr International Ltd. (NYSE:FVRR) share price rocketed moonwards 387% in just one year. Also pleasing for shareholders was the 94% gain in the last three months. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.

See our latest analysis for Fiverr International

Fiverr International isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Fiverr International grew its revenue by 54% last year. That's a head and shoulders above most loss-making companies. But the share price has really rocketed in response gaining 387% as previously mentioned. Even the most bullish shareholders might be thinking that the share price might drop back a bit, after a gain like that. So this looks like a great watchlist candidate for investors who look for high growth inflexion points.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
NYSE:FVRR Earnings and Revenue Growth August 11th 2020

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. So it makes a lot of sense to check out what analysts think Fiverr International will earn in the future (free profit forecasts).

A Different Perspective

Fiverr International boasts a total shareholder return of 387% for the last year. A substantial portion of that gain has come in the last three months, with the stock up 94% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Fiverr International you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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