Stock Story -
What Happened: Shares of online freelance marketplace Fiverr (NYSE:FVRR) jumped 12% in the morning session after the company announced a share repurchase program to buy back up to $100m of its shares, signaling management's commitment to driving value for shareholders. This could provide some encouragement for investors as buybacks reduce the total number of shares in circulation.
Is now the time to buy Fiverr? Find out by reading the original article on StockStory.
What is the market telling us: Fiverr's shares are very volatile and over the last year have had 36 moves greater than 5%. But moves this big are very rare even for Fiverr and that is indicating to us that this news had a significant impact on the market's perception of the business.
The previous big move we wrote about was 22 days ago, when the company gained 5.3% as major indices rose, with the S&P 500 up 0.8% while the Nasdaq gained 1.2%, as the Federal Open Market Committee left the policy rate unchanged at 5.25-5.50% during its March 2024 meeting. In addition, the committee guided three rate cuts in 2024, in line with its previous projections and market expectations. However, the Committee continued to highlight the focus on getting inflation back down to the 2% target.
Ahead of the meeting, markets were worried that recent inflation data would push the Fed to keep rates higher for longer, potentially resulting in fewer rate cuts in 2024. Notably, the Bureau of Labour Statistics reported that the CPI (Consumer Price Index - a gauge of average price consumers pay for goods and services) for the month of February 2024 came in slightly hotter than expected at 3.2% year on year (vs. Consensus for 3.1%), mostly due to increases in gasoline and shelter prices.
As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. With lower interest rates, investors can apply higher valuations to their stocks. No wonder so many in the investment community are optimistic about 2024. We at StockStory remain cautious, as following the crowd can lead to adverse outcomes. During times like this, it's best to own high-quality, cash-flowing companies that can weather the ups and downs of the market.
Fiverr is down 20.8% since the beginning of the year, and at $20.73 per share it is trading 43.6% below its 52-week high of $36.77 from April 2023. Investors who bought $1,000 worth of Fiverr's shares at the IPO in June 2019 would now be looking at an investment worth $519.80.