Options Activity Shows Things Might Start Getting Real for Fiverr (FVRR)

Easily one of the most transformative developments of the COVID-19 crisis centered on the changes in the U.S. labor market. Once considered a premium luxury, working remotely became the norm for white-collar employees throughout the worst of the pandemic. However, now that employers are becoming skeptical about the telecommuting experiment, freelance networking platforms like Fiverr (FVRR) can enjoy serious upside.

Of course, the print already indicates that FVRR stock blossomed this year. Since the January opener, Fiverr shares skyrocketed to a blistering 62.92% return. Looking strictly at the narrative, it’s difficult not to get excited about the company’s forward prospects. Most notably, entertainment giant Disney (DIS) put an end to its hybrid work arrangement, requiring that from March 1, employees must come into the office four days a week.

With such a massive enterprise pivoting back to the normal way of conducting business, it’s likely that its peers will follow suit. Immediately, two factors bolster this thesis. First, on the employers’ end, they don’t need to play softball with their recalcitrant employees. With layoffs sprouting aggressively – particularly with high-paying technology jobs – no one’s position is safe.

In other words, not showing up to work as requested (i.e. insubordination) allows employers to terminate uncooperative workers cold turkey rather than laying them off, which usually involves severance packages. Quite bluntly, no company will give a severance package to someone for being a fool.

Second, employees themselves have every reason to go back to the office in a bid to keep their jobs. Obviously, by being present, it creates the perception of productivity (even if it’s not accurate). Just as importantly, should the ship go down anyways, worker bees will want to maintain positive relations with their employers.

Otherwise, in a competitive field of other desperate laid-off workers competing for new jobs, not having letters of recommendation from superiors would look conspicuously unfavorable. Still, many workers won’t take the above prudent approach, which cynically favors Fiverr.

Options Traders See the Green Light in FVRR Stock

When the Feb. 2 session closed, it wasn’t particularly shocking to see FVRR stock rank among the top entities for unusual stock options volume. For Fiverr, volume reached 8,672 contracts against an open interest reading of 15,409. The difference between the aforementioned session volume against the one-month average volume came out to 613.74%.

Enticingly, call volume pinged at 7,247 contracts while put volume sat at 1,425, resulting in a more than five-fold difference between calls and puts. Per Barchart.com, the implied volatility (IV) rank hit 22.34%, which indicates the (at the money) average IV relative to the highest and lowest values over the trailing one-year period.

At time of writing, the put/call open interest ratio stood at 0.59. Mathematically, a ratio of one-to-one indicates an even number of puts and calls being acquired. However, because the market features an upward bias, 0.70 typically delineates between bullish and bearish sentiment, with figures lower than this level indicating that more traders are purchasing call options.

For full disclosure, in the trailing year, FVRR stock dropped nearly 41%, indicating significant risks. Currently, FVRR’s 60-month beta reads 1.79, which indicates much higher volatility than the benchmark equities index. Still, in those 60 months, Fiverr shares returned stakeholders over 48%.

Notably, Barchart’s technical opinion indicator suggests FVRR stock is a 40% buy. Naturally, the intense enthusiasm that FVRR recorded recently helped sway this indicator. However, the underlying fundamentals very much support a higher valuation for the freelance networking service.

Since at least the fourth quarter of 2020, Fiverr has exceeded analysts’ consensus estimates for earnings per share. In the last financial disclosure, Fiverr posted an EPS of 21 cents against the average target of 10 cents. Therefore, FVRR stock isn’t just a wager on a cute narrative. Rather, the underlying enterprise has been bringing home the goods – and quite consistently.

The Gig Economy May Expand Wider Than Anticipated

According to Industry Research, the gig economy reached a valuation of $355 billion in 2021. Experts there project that by 2027, the sector could command a value of $873 billion, ultimately expanding at a compound annual growth rate of 16.18% from 2022 to the end of the forecasted period.

It’s more than possible. Indeed, the figure could be understated.

To clarify, I expect most workers to tow the company line should recall notices disseminate with great intensity. However, there will be many corporate employees – having received a taste of the gig worker’s lifestyle – who will branch out on their own. For this reason, investors should consider fundamentally relevant enterprises that may benefit from an increase in independent contractors.

However, Fiverr is well positioned to soak up demand from soon-to-be gig workers. Unlike tax preparers or digital payments platforms, Fiverr represents the frontline of the gig economy. In other words, the company holds the contracts that can spell success for the independent types. Thus, for patient investors, FVRR stock has a long way to go before peaking.

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