• If you are wondering whether Fiverr International's current share price really reflects what the business is worth, you are not alone. This article will help you frame that question clearly.
• The stock finished the last session at US$11.68, with returns of an 18.5% decline over 7 days, 27.7% decline over 30 days, 40.7% decline year to date, 54.6% decline over 1 year, 70.8% decline over 3 years and 95.7% decline over 5 years.
• These moves have kept Fiverr in focus for investors looking at how the online freelance market is being priced. Recent coverage has largely centered on how the share price compares to expectations for the business, funding conditions for tech names and sentiment towards platforms that rely on discretionary spending.
• On Simply Wall St's 6 point valuation checklist, Fiverr scores a 3 out of 6. Next we will look at what that means across different valuation methods and why there may be an even better way to think about value by the end of this article.

Approach 1: Fiverr International Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business could be worth by projecting its future cash flows and then discounting those back to today using a required return. It is essentially asking what those future dollars are worth in present terms.

For Fiverr International, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is reported at $102.79 million, and analysts provide explicit projections up to 2027, with Simply Wall St extending those estimates out to 2035. For example, projected free cash flow for 2027 is $55.95 million, and the extrapolated 2035 figure used in the model is $50.06 million, both expressed in present value terms after discounting.

Putting all those discounted cash flows together results in an estimated intrinsic value of US$20.54 per share. Compared with the recent share price of US$11.68, the DCF output suggests Fiverr is trading at a 43.1% discount, which points to the shares screening as undervalued on this model alone.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Fiverr International is undervalued by 43.1%. Track this in your watchlist or portfolio, or discover 54 more high quality undervalued stocks.

Approach 2: Fiverr International Price vs Earnings

For a company that is generating earnings, the P/E ratio is a useful way to think about what you are paying for each dollar of profit. The level of P/E investors are comfortable with usually reflects what they expect for future earnings growth and how much risk they see in those earnings.

Fiverr currently trades on a P/E of 20.56x. That sits above the Professional Services industry average P/E of 19.57x and above the peer group average of 16.65x. On the surface, that suggests the market is placing a higher multiple on Fiverr than on many of its listed peers.

Simply Wall St also calculates a proprietary “Fair Ratio” for the P/E, which estimates what a more tailored multiple might be once factors like earnings growth, profit margins, industry, market cap and company specific risks are taken into account. For Fiverr, this Fair Ratio is 28.20x, which is meaningfully higher than the current 20.56x. Compared with this Fair Ratio, the present P/E implies the shares screen as undervalued on this metric.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Fiverr International Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which simply means writing down the story you believe about a company and tying that story directly to your forecasts for revenue, earnings, margins and a fair value estimate.

On Simply Wall St, Narratives live on the Community page and turn this story into numbers. This allows you to see how your view of Fiverr connects to a financial forecast and then to a fair value that you can compare with the current share price to decide whether it looks attractive or expensive to you.

These Narratives refresh when new information such as news or earnings is added. You can also see how other investors think. For example, one Fiverr Narrative on the platform currently points to a fair value of US$16.22 per share, while another points to US$43.33 per share. This shows how different assumptions about future revenue growth, profit margins, discount rates and future P/E multiples can lead to very different views of what the company is worth.

Do you think there's more to the story for Fiverr International? Head over to our Community to see what others are saying!

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.