The stock market plummeted in the early days of the epidemic, then rebounded to produce excellent returns in 2020 and 2021. In fact, last year's S&P 500 closed at a new high 70 times, a record not seen since 1995. Unfortunately, that agitated atmosphere was accompanied by company closures and supply chain disruptions, which resulted in an uptick in inflation.
The Federal Reserve's made the decision to raise interest rates three or four times in 2022, in response to the rising inflation. This is a move that makes it more difficult for firms to finance development with debt, and thus has sparked fears about the slowing global economy.
Growth equities have seen a decrease in investor interest, as you might expect. For example, Fiverr International and Global-e Online are now trading 75% and 55 percent below their all-time highs. That creates an ideal opportunity for long-term investors, and here's why.
Fiverr International (NYSE: FVRR)
Fiverr is a major contributor to the gig economy. Its market connects enterprises with freelancers, and its catalog includes over 500 digital service categories, including marketing, design, and website development. That means companies have quick access to a worldwide pool of talent. Additionally, for freelancers, Fiverr provides them the freedom to work whenever and wherever they choose.
To entice gig workers to its platform, the firm offers a number of value-added services, including as Fiverr Learn online training courses and Promoted Gigs advertising solutions.
Fiverr also relies on artificial intelligence to customize the buyer's experience. Thus, ensuring that search results and suggestions are more relevant for each action and transaction on the site. Those features have made Fiverr popular among both freelancers and corporations. Fiverr's other attractions such as easy payment options and a large community of buyers, are very popular as well.
Active buyers of Fiverr stock, rose 33% to 4.1 million in the most recent quarter, and spending per buyer increased 20% to $234. Even more remarkable, Fiverr's take rate – revenue divided by gross merchandise value – hit 28.4 percent.
That number, more than any other statistic, demonstrates the value that its clients receive. The company's sales increased 42% to $74.3 million as a result. Despite being unprofitable on a GAAP basis, Fiverr generated $8.8 million in free cash flow during the third quarter.
Looking into the future, the firm forecasts a market opportunity of $115 billion. The company has laid out a clear development plan that focuses on increasing the number of buyers and sellers on the platform, offering new freelancer services and jobs, climbing up the market, and expanding internationally. Fiverr is also working on a task management platform, Fiverr Workspace, that will enable freelancers to run their businesses both on and off the site.
Following the most recent selling, Fiverr stock trades at 11 times sales, considerably less than its average valuation of 20.8 times since going public. That's why now seems like a good time to add this growth stock to your portfolio.
Global-e Online (NASDAQ: GLBE)
Global-e specializes in cross-border e-commerce. Its platform aids companies in moving into new markets by eliminating language, currency, and regulatory hurdles that have previously made doing so complicated.
To that end, Global-e links to a seller's website to localize language, pricing, payment, and delivery choices on a market-by-market basis. The results in improved international conversion rates by 60% or more.
Global-e also assists merchants in calculating and paying import duties and taxes, providing customer support, and managing returns across foreign borders. Furthermore, each transaction and online interaction generates data for Global-e to utilize artificial intelligence to generate actionable insights for its merchants, creating a flywheel effect that should boost conversion rates over time.
In the third quarter, GMV – the total value of all purchases – increased 86% to $352 million. Revenue climbed 77% to $59.1 million, and gross margin improved by 840 basis points to 38.6 percent as high-margin service fee income outpaced growth in fulfillment fees. On the whole, Global-e generated $5.1 million in free cash flow despite losing money on a GAAP basis.
Global-e has collaborated with Meta Platforms' Facebook and Shopify as part of its expansion strategy. The latter is significant because it serves over 1.7 million companies worldwide, allowing Global-e to benefit from its client base quickly.
Forrester Research forecasts that the worldwide e-commerce market will reach $736 billion by 2023. Global-e handled $1.2 billion in GMV in the previous year, a figure that represents less than 0.2 percent of its entire market. But that will change in the future.
Since 2018, Global-e stock has shown that it can generate value for merchants. In fact, the company's net retention rate has been over 140% since then, implying that each client is spending 40% more each year.
Finally, Global-e's sales multiple of 21, is significantly lower than its historical average of 35.5. That's why now appears to be a great time to get in on this fast-growing company.