r/valueinvesting
What are we thinking about FVRR?
FVRR faces declining users and AI disruption, but its negative enterprise value and pivot to complex tasks offer compelling value.
- Trading at a negative enterprise value with $411M net cash against a $373M market cap, plus $57M authorized buybacks.
- Pivoting to more complex implementations after AI disrupts easy tasks offers relatively guaranteed upside.
- Business is declining with a 13% year-over-year decrease in users and flat revenue guidance.
- AI has killed high-volume, easy tasks, threatening its historical 8-10% growth and 20% take rate model.
Yes it's a declining business, 13 percent decrease in users year over year, about the same in revenue guidance. Not great.
But I mean 373m MC against 411m in cash and cash equivalents net of debt, 57m in buybacks authorized. I just love negative valued business (like being paid to take a business).
I went absolutely yolo with another stock oddity who 2 weeks ago was 670m cash against 540m mc (now 720mc), so I'm loving these negative value situations.
The question isn't will fiverr grow its historical 8 to 10 percent with 20 percent take rate, but even a repivot to a more modest business where AI has killed the high volume easy tasks and they have to upscale to more complex implementations means pretty guaranteed upside.
Not quite ready to buy, just throwing this out there.
Among all the things that are threatened by AI, things like fiver and mechanical turk have to be the most vulnerable.
Wouldn't invest in a middleman like this if you paid me to.
I think your cash & equivalents numbers are wrong. Real number was closer to $242M for cash + securities in their last annual report. I suspect your error is you included user funds held by Fiverr (~$160M) as “cash”.
This is common in financial stocks where company’s hold users money in an account so you need to be careful picking apart their asset values.
Fiver offer low quality shit and AI do a better job creating low quality shit
As a ex-fiver user, talking with those seller can take 10x as much time as using AI….
it's a dying business, as hard as they are trying to revive it.
(aside: that covid-driven rise from $30 to $300 in just 1 year should look familiar to everyone driving up the stock price of AI adjacent stocks; the subsequent crash from $300 to $10 should serve as a cautionary tale for the same investors).
upwork is much better
also this isn't a great argument, but i've never seen an israel-listed company serve investors well long-term.
Just wanted to reply again: UPWK is better!
You've kinda negated my whole post, congrats.
See I live and die by DCFs, unfair DCFs, i.e. overly pessimistic. And yes, upwk at absolutely horrible scenarios (3 to 6 percent annual declines thru 2031) is still a double fair value wise.
Get even mildly optimistic like grow with inflation and this is a multibagger.
Haha nice thanks. Yes I'm expecting some downturns, but long-term I like them a lot in my growth basket.
I view them as catering to the secular trend of more people trying their hand at creating businesses -- which will be a very volatile/discretionary category. But I like their product, capital management, and position relative to their main competitor (fiverr).
I think they will definitely do well "eventually" but I wouldn't be surprised if the path is extremely rocky. And there is non-zero potential that they compound a lot during the next consumer credit cycle (which I view as currently tightening due to many factors including inflation/job scarcity), similar to how there was a big demand spike 2019 - 2022 when tons of new indie businesses were formed.
Tower semiconductor, teva, etoro is down from ipo but well run and undervalued. I disagree that Israel is necessarily a no go zone like for me, china (yes baba, I'm willing to miss out on the occasional gem).
So I don't see that as an argument. Your first point, probably true. Again, I love fallen angels, so priced for "absolute death" and the repricing to "bad but maybe not quite as bad" is where I find value.
everything semi is doing well so ill exclude that sector for now (also after looking at the chart -- not so great excluding recent few years)
Teva looks like a good example though, nice one. I didn't know. The fact that after that you had to go a recent IPO after that though kind of illustrates my point that the base rate is insanely low.
This is the classic negative-EV setup, and it's seductive for good reason — but the cushion
only does what you think if two things hold, and I'd nail both before trusting the
"guaranteed upside" framing:
1. The cash has to not be melting. Net cash > market cap is only a margin of safety if the
business isn't burning that cash. So the first number I'd pull is free cash flow: is FVRR
still generating cash, or slowly eroding the pile? A declining business with positive FCF is
a cigar butt you get paid to hold; one that's burning cash closes its own "negative EV" the
wrong way, quarter by quarter.
2. The buyback and cash have to be real, not SBC laundering. This is the one that kills a lot
of these tech "they're buying back stock!" theses — check stock-based comp as a % of revenue
and whether diluted share count is actually falling. If the $57m buyback is mostly mopping up
SBC dilution, it's treading water, not returning value, and that "cash" is partly tomorrow's
dilution sitting on today's balance sheet.
On the business itself — I think the thesis hand-waves the real risk. A 13% user decline in a
marketplace whose core was high-volume standardized tasks (logos, simple copy, basic dev) is
the leading edge of exactly the AI disruption you mentioned, not a one-off. The "repivot to
complex implementations" is a genuinely hard pivot most marketplaces fail — so "pretty
guaranteed upside" is doing a lot of work for what's really an unproven turnaround. A melting
ice cube with a pile of cash still melts; the bet is whether the melt stops before the cash
does.
None of that says it's a bad situation — negative-EV cigar butts can absolutely work. It just
means the bet isn't "modest growth + free cash," it's "does revenue stabilize before the cash
erodes, and does that cash actually reach me." Before sizing it I'd want: FCF trend, SBC and
share-count trend, take-rate vs active-buyer trend (are they propping revenue by squeezing
take rate, which can accelerate churn?), and management's history of returning cash vs sitting
on it.
What's your read on the cash erosion rate — is FCF still positive, or is the clock ticking on
the cushion?
fvrr has a pro level that give access to top tier workers and project management. i don't think everyone realizes that. people have used fvrr casually almost, but it can be leveraged really well... and they always refund your money if you aren't happy. I like fvrr, have invested in the past, but the market just doesn't want any part of it. I think until they can rebrand as AI adjacent project management... they are gonna be stuck. I've used them for engineering, solar design, architectural drawings, blueprints, of course logos and branding... I think if you can find a good team lead to work with or multiples of that you can easily leverage fiverr and build a good business. Market hasn't gotten the memo.
The cash-over-MC setup is genuinely interesting, but the bear case isn't just declining users, it's whether management burns that cash cushion trying to pivot before the market forces a return of capital. Worth watching what they actually do with the buyback authorization before sizing in.
Honestly I don't love the high level of sbc too. Some of my posts have been more "drop everything and buy", not this. It's more... It seems to be my fallen angel kinda play, crazy setup, still unsure.
The biggest question is what will I sell to make this happen. Pypl, brbr, odd, chtr have my capital. So far none, but that could change.