With the business potentially at an important milestone, we thought we'd take a closer look at Fiverr International Ltd.'s (NYSE:FVRR) future prospects. Fiverr International Ltd. operates an online marketplace worldwide. The US$1.4b market-cap company posted a loss in its most recent financial year of US$65m and a latest trailing-twelve-month loss of US$64m shrinking the gap between loss and breakeven. The most pressing concern for investors is Fiverr International's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 9 of the American Online Retail analysts is that Fiverr International is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$1.1m in 2024. The company is therefore projected to breakeven around 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 73% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Fiverr International given that this is a high-level summary, however, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Fiverr International currently has a debt-to-equity ratio of 171%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Fiverr International, so if you are interested in understanding the company at a deeper level, take a look at Fiverr International's company page on Simply Wall St. We've also put together a list of important aspects you should further examine:
Valuation: What is Fiverr International worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Fiverr International is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Fiverr International’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.