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Ringing the opening bell of a company about to start its first day of trading is an old tradition on the New York Stock Exchange. The CEO on stage above the trading room has the eyes of a few hundred traders for a few seconds and draws tremendous attention from the media.
In the case of Fiverr, the Israeli company whose online platform matches freelancers and employers, its founder and CEO, Micha Kaufman, did something unusual last Thursday when she started trading on the NYSE: 13 buyers and sellers of Fiverr were on stage services.
The 13 of Fiverr's most experienced users have been dispatched from around the world not only to thank for their help, but to show the world the diversity of the Fiverr community. The entrance to NYSE's Wall Street building was adorned with a banner designed by designers from the Fiverr community with the motto: "Doers take Wall Street."
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Fiverr serves as a market for freelancers who offer services such as writing, logo design, voiceover, social networking and translation, primarily for small and medium-sized businesses and individuals.
Founded in 2010 by Kaufman and Shai Wininger (who has since founded the founding of online insurer Lemonade), Fiverr, headquartered in Tel Aviv, initially asked freelancers to charge a fixed fee of $ 5 for their work. The company changed the policy four years later to allow freelancers to bill what they wish.
For Fiverr, the party debut continued. The stock price was set at $ 21 as part of the IPO. They opened their first trading day at $ 26 and finished at $ 39.90. They fell 21% Friday to $ 31.49, but it still represented a two-day gain for shareholders of 50%.
Barron's magazine, the bible of stock market investors, said the Fiverr IPO and two other tech companies had brought back memories of the e-commerce boom market.
"In recent days, the IPO market has been reborn out of the left field. Three very different types of technology companies were released last week – and the market has escalated for all three. It was a vertigo, like a 1999 flashback, "the magazine said.
The IPO price of $ 21 for Fiverr was above the expected range of between $ 18 and $ 20, which, on the one hand, gave the company a great boost in public relations, but also suggests that underwriters have mismanaged the price of the issue.
Fiverr sold 17% of its shares to the public during the IPO, which valued the company at $ 650 million. Its market capitalization was $ 1.2 billion on Friday, which means Fiverr could have raised almost twice as much capital with the same dilution, an amount that could have been used to fund future growth.
If Fiverr had been valued at $ 800 million for the IPO, as had been the original goal of the company, it would have yielded an additional $ 35 million into the company's coffers and would have provided a good return for investors. Wall Street the first day of trading.
The recovery of a day benefited some investors who subscribed to the IPO and saw their shares jump 90% in a few hours. Fiverr's insider shareholders and employees with stock options have had to stay away and remain vigilant as they are prohibited from selling their stock within the next six months.
Sources involved in the IPO said the undervaluation of Fiverr was due to falling stock prices for Upwork, a company widely considered a rival to Fiverr. Upwork reports 3.5 times revenue and three times Fiverr's cash-flow, but a series of disappointing results has reduced its share price by a third since its February high and its market capitalization of 1, $ 6 billion is only one-third of Fiverr's current value.
Fiverr hoped investors would compare it to Etsy, an online marketplace where artisans and small businesses sell their wares. Etsy has a market capitalization of $ 8 billion four years after its IPO. It has doubled its sales since 2015 and became profitable two years ago.
However, when Etsy became public, his IPO was considered a failure. Stocks dropped 50% on the first trading day and lost 75% over the next nine months. They have finally grown and today, Etsy is considered a high performing consumer brand. Fiverr can not hope to equal that performance one day.
At the time of its IPO, Etsy had 1.4 million active sellers and nearly 20 million buyers and was losing $ 54 million for the year. In comparison, Fiverr had 255,000 active freelancers in the first quarter and 2.1 million buyers. Its revenues increased by 45% in 2018 to reach $ 75.5 million, but its losses almost doubled to $ 36 million.
Fiverr is part of a market economy, such as Uber and Lyft, which has been criticized for creating unstable, low-paying jobs with few benefits, even though they are opening global markets for small businesses.
But Kaufman says that Fiverr's independents are different from Uber drivers because they are skilled professionals and they can set their own prices.
"I think if you have a market that pushes to bid, then certainly, yes, there is downward pressure," he told TechCrunch's high tech website on Thursday. "In a market where freelancers define their own perimeter, calendar and price, the trend is reversed. We see freelancers all over the world making more and more money every year. It's a counter-intuitive or rather counter-cyclical race. "
After the company was criticized for an advertising campaign extolling its freelancers' willingness to make sacrifices to carry out their work, Fiverr began offering freelance educational videos under the name Fiverr Elevate on topics such as advertising. savings, cash management, taxes and pensions. help them get the most out of their business income. She also bought American start-up And Co with a portfolio of online tools to help freelancers run their businesses.
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