What is Fiverr? IPO of Gig Economy Company on the first day

Gig-economy service Fiverr got a new position as a public company on Thursday.

Fiverr is the last freelancer to go public, several months after his colleague Upwork came on the market. Starting at $ 26 per share (already more than 23% higher than the initial price of $ 18 to $ 20), Fiverr shares are already trading up more than 75% since intraday trading day. The company mimics online shopping services by creating a market allowing businesses to buy independent services – with a starting cost of $ 5 per job. According to the company's F-1 document, the company's target price gave Fiverr an estimated value of approximately $ 650 million.

But why does this independent millennium make so much noise?

Fiverr, much like the competitor Upwork, provides a platform for "buyers" (companies) and "sellers" (freelancers) to exchange digital services independently. Nicknamed the "big economy," companies such as Fiverr have grown in terms of the number of independent or distant positions on the market – and are starting to take advantage of it.

But it seems that Wall Street is slightly less optimistic about the potential of the "gig economy". In fact, competitor Upwork's shares climbed some 50% during the first day of trading in October, but have since fallen to near their market introductory price at around $ 15 per share.

And with the losses suffered by Fiverr (about $ 1.26 per share for the first quarter), some investors are wary.

"Losses are really a problem here, but they are not that important: they lost about $ 25 million in 2019 and it will be pretty much the same in 2020, but it will be until at least 2022 until we realize profitability, "Kathleen Smith, director of Renaissance Capital, an IPO ETF provider for institutional research and institutional research. "This is a negative point, so this company will have to post a growth and at least a directional shift in profitability."

Smith added that the problem with rival Upwork was that "investors were a little disappointed [with their reports] because growth rates have not been as high as those expected by investors. "

But Fiverr is banking on the growing sector of freelancers. In fact, recent statistics seem to confirm the bet of the company.

According to recent studies, growth forecasts for freelancers increase by 3.5% from one year to the next. And according to Upwork's Future Workforce Report 2019, about 74 percent of Generation Y and Generation Z executives have workers who work primarily remotely. And, according to the report, about 50% of executives have used freelancers more than ever since 2016.

It is clear that Generation Z and Generation Z workers are bending to this new way of working, as nearly half of Millennials would have a problem, according to a new Bankrate survey.

According to Keith Ryu, CEO and co-founder of the Fountain hiring and hourly recruiting platform, the overall staffing trend deserves to be optimistic. "The direction in which work evolves opens up many new opportunities for innovation to manage large pools of labor and generate consistent results, match talents to tasks, and train and monitor scalable levels." Ryu said Fortune by email. "The economy of the year is growing three times faster than the entire US workforce, while the number of US announcers is expected to double over the next four years . "

In fact, even though companies such as Fiverr and Upwork are still relatively small compared to other recent IPOs, experts suggest that the future of the workforce is moving away.

"The Fiverr brand is more of a low-cost global workforce that they connect. So it's basically a reflection of what's happening in the world of work, "said George LaRocque, founder and principal badyst at HRWins, a human resources technology. business. "Employers routinely expect to increase their spending on [freelancers] year after year, for 15 to 20 years. What these tools do … provides another kind of on-demand access to this talent. "

But what is less clear, is how companies like Fiverr and Upwork can generate revenue from the sector.

"It concerns us, Fiverr, because their sales are low … it really means that there is a lot of turnover and that they have to continue doing marketing to attract new people" Smith said.

"I would not compare [Fiverr] at Uber or Lyft, mainly because Uber and Lyft have much larger losses, "said Smith. "[Fiverr] has losses [and] the expenses are huge in sales and marketing. So I think investors say, "The losses are not that big and they expect it to be profitable."

Whether or not Fiverr is set to follow the same volatile trajectory as other stocks such as Lyft and Uber, badysts remain optimistic about the large economy space that the company serves.

"What we call the" human cloud "is the next wave of talent available that has been validated by skills or certification. This is the goal on which all major recruitment companies focus. I think it's representative of what Fiverr is doing to quickly provide the talent available, "LaRocque said. "I think that's where we'll see a big impact in this space."

Yet, it seems that Fiverr's stock has been exceeded. Smith says the stock appears to have "full valuation" and "investors need to be cautious".

The company is now listed on the New York Stock Exchange under the symbol "FVRR". The Fiverr blocking period is 180 days, with underwriters including JP Morgan, UBS, Citigroup and more.

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