If any company is emblematic of the “new economy,” it would be Fiverr (NYSE:FVRR). As the Covid-19 pandemic forced a transition from business-as-usual to remote/hybrid work, FVRR stock made a stunning 10x move in matter of months.
There’s a sense of irony here. Fiverr has a reputation for being a platform where employers can get cheap work from freelancers. At the same time, the Fiverr share price has become rather expensive.
It’s entirely possible that some gig workers on Fiverr don’t make enough money to afford one share of FVRR stock. Maybe it’s time for a change – and actually, there are changes afoot at Fiverr.
Due to a recent acquisition, Fiverr may be able to empower freelancers to enhance their skills and earn more money. It’s an audacious move for Fiverr to alter its business model now, so investors will have to decide whether the acquisition is forward-thinking or misguided.
A Closer Look at FVRR Stock
Not too long ago, RBC Capital analyst Brad Erickson reiterated his “buy” rating on FVRR stock while also attaching a price target of $200.
That’s a perfectly reasonable price objective, I’d say. After all, $200 was a resistance level in late September, so it’s a good target for the bulls to aim for.
Besides, FVRR stock has gone much higher than $200. In February, it hit a 52-week high of $336 before coming back down to earth.
For the time being, the long-term investors should maintain a sense of perspective.
Fiverr shares only cost around $20 in March of 2020, so the returns have been outstanding and we can’t expect the stock to just keep going up continuously.
The most sensible objectives for the remainder of 2021 would be the $200 price level, followed by $225. After FVRR stock breaks above those levels, the sky’s the limit.
Like freelance workers themselves, Fiverr as a business venture must think outside of the box in order to remain competitive.
So, Fiverr has evidently decided to venture outside of its decade-long business model.
Reportedly, the company has acquired Seattle-based online learning company CreativeLive.
It’s difficult to assess whether Fiverr got a good deal or not, as the financial terms of the transaction remain undisclosed.
What we do know is that CreativeLive operates an education platform with an entrepreneurial angle. On this platform, the users can learn about design, business, photography, marketing and more.
The platform offers over 2,000 classes across a variety of creative and business categories. Supposedly, CreativeLive’s instructors include Pulitzer, Grammy and Oscar winners.
As a result of this transaction, Fiverr’s current online learning platform, known as Fiverr Learn, will be folded into CreativeLive.
New Skills for a New Economy
As of June 30, Fiverr held $563.8 million in cash and equivalents. So, I would surmise that the company could easily afford to acquire CreativeLive.
Only time will tell, really, whether this acquisition will benefit Fiverr’s business model.
The skeptics would probably argue that Fiverr was doing just fine, and didn’t need to implement any major changes.
After all, the company generated $75.3 million in revenues during the second quarter of 2021, marking a 60% year-over-year increase.
But then, Fiverr CEO Micha Kaufman makes a compelling case that his company must adapt to an economy in flux.
“The ability to acquire new skills in a rapidly changing work environment and then be able to monetize them is part of Fiverr’s role in leading transformation for buyers and sellers on our platform,” Kaufman explained.
“The acquisition of CreativeLive is part of this broader strategy,” the Fiverr CEO continued, adding that the CreativeLive team’s “expertise in creating compelling learning experiences across industries is a natural fit for us as we scale this part of our business.”
The Bottom Line
Change isn’t always comfortable or easy. Yet, sometimes it’s necessary.
Fiverr already had a great business model, but an economy in transition requires out-of-the-box thinking.
If you don’t approve of the CreativeLive acquisition, feel free to sell your FVRR stock shares.
But if you’re on board with Fiverr’s push for freelancer education, consider holding the stock until it breaks through $200 on the way to, potentially, $300 and beyond.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.