In this article, we look at the 10 Worst Middle East and Africa Stocks To Buy According to Short Sellers.
Moderate Growth Amidst Challenges
According to the IMF’s Middle East and North Africa Economic Update from April 2024, the MENA region is expected to see moderate growth of 2.7% in 2024, up from 1.9% in 2023. Both oil-importing and oil-exporting countries in the region are projected to grow at similar rates, with the gap between the Gulf Cooperation Council (GCC) economies and developing oil importers (excluding Egypt) expected to be around 1%. The region’s GDP per capita is forecasted to increase by only 1.3% in 2024, primarily driven by the GCC nations. However, ongoing conflicts continue to weigh on the region’s economic activity, especially in Palestine. Gaza’s economy, for instance, saw an 86% decline in Q4 2023 compared to the same period in 2022. Trade disruptions, notably through the Suez Canal, have also affected regional and global commerce.
Over the last decade, many MENA economies have faced rising debt-to-GDP ratios, particularly among oil-importing countries, which struggle to reduce these ratios due to high oil prices. The inability to lower debt through inflation, exacerbated by exchange rate fluctuations and off-budget factors (stock-flow adjustments), underscores the need for greater debt transparency. In contrast, oil-exporting nations tend to see smaller increases in debt-to-GDP ratios during periods of high GDP growth, and in some cases, a decrease.
Meanwhile, private equity (PE) and venture capital (VC) investments have gained momentum in the Middle East and Africa, reflecting a shift in investment trends. Data from Preqin and the Dubai International Financial Centre (DIFC) reveals that about 65% of regional investors plan to maintain or increase their exposure to private equity in 2024, with 56% expressing similar interest in venture capital.
Despite the challenges posed by geopolitical tensions, venture capital continues to play a crucial role in the region’s investment landscape. Investors remain optimistic, with many reporting that their PE and VC investments have met or exceeded expectations. Key sectors attracting interest include fintech, technology, healthcare, and infrastructure.
As the region navigates the complexities of economic growth, debt management, and investment trends, it’s clear that there are both challenges and opportunities on the horizon. Investors remain optimistic about the region’s potential, however, it’s essential for policymakers to prioritize debt transparency, economic diversification, and infrastructure development to unlock the full potential of the MENA region’s economies. With that in context, let’s take a look at the 10 worst Middle East and Africa stocks to buy according to short sellers.
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Our Methodology
For this article, we used a Finviz stock screener to find 20 large companies in the Middle East and Africa, by market cap. From that list, we shortlisted companies that have the highest percentage of shares outstanding that were sold short. The list is sorted in ascending order of their short interest. We also mentioned the hedge fund sentiment around each stock.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Worst Middle East and Africa Stocks To Buy According to Short Sellers
10. Yalla (NYSE:YALA)
Short Interest as % of Shares Outstanding: 0.34%
Number of Hedge Fund Investors in Q2 2024: 4
Yalla (NYSE:YALA) is headquartered in the UAE and operates a popular social media and gaming platform primarily serving the Middle East and North Africa (MENA) region. Its platform, Yalla, offers voice chat rooms and online games, making it a favorite among younger users. Since its launch in 2018, Yalla (NYSE:YALA) has rapidly grown to become a significant player in the region’s digital space, with revenues reaching around $319 million by the end of 2023, logging a compound annual growth rate (CAGR) of approximately 50%. The company has consistently maintained strong operating profit margins, averaging 25% over the last five years, and has built a net cash position exceeding $500 million.
In Q2 2024, Yalla (NYSE:YALA) reported revenue of $81.2 million, a 2.5% year-over-year increase, driven by a growing user base and enhanced monetization strategies. Average Revenue Per User (ARPU) jumped from $5.8 to $6.6 compared to the previous year. The company also effectively managed costs, reducing expenses by 6.8% to $51.6 million while keeping the cost of revenues stable at 35.7%. Selling and marketing expenses fell by 31.4% due to a more disciplined advertising approach, and general and administrative expenses decreased by 5.5%. Operating income surged by 23.8% to $29.6 million. Additionally, Yalla (NYSE:YALA) benefited from a rise in interest income, which reached $7.1 million due to higher interest rates on bank deposits. Despite an increase in income tax expenses following the UAE’s Corporate Tax Law implementation, Yalla’s (NYSE:YALA) net income rose by 10.9% to $31.4 million, showcasing strong financial performance with robust revenue growth, cost management, and profitability.
During its Q2 earnings call, Yalla’s (NYSE:YALA) management expressed optimism about the company’s outlook. They highlighted stable performances from their flagship apps, Yalla and Yalla Ludo and anticipate that Q3 results will outperform Q2. The company continues to enhance operating efficiency, exemplified by Yalla Ludo’s organization of offline tournaments across multiple MENA cities, boosting brand presence and market penetration. Looking ahead to the remainder of 2024, Yalla (NYSE:YALA) expects to sustain its solid performance, with a focus on efficiency improvements. In terms of new products, Yalla (NYSE:YALA) is investing more resources into developing mid-core games, with three currently in the pipeline, set for testing by year-end before broader promotions based on user feedback.
The MENA social media market is expected to grow from $41 billion in 2024 to $59 billion by 2029. However, competition from global giants like Meta, TikTok, Snapchat, and LinkedIn poses a challenge to Yalla’s (NYSE:YALA) growth. The company is actively exploring new monetization strategies, such as premium membership models and advertising, to drive revenue. Yalla’s (NYSE:YALA) large and expanding user base also offers significant opportunities for advertisers targeting the MENA region. Additionally, Yalla (NYSE:YALA) is exploring international markets like South America, though the MENA region remains its primary focus due to its competitive advantages there. The company has also committed to share repurchases and is open to new initiatives aligned with its core businesses and MENA culture.
Yalla (NYSE:YALA) has the potential to forge strategic partnerships with telecom operators, media firms, and digital platforms within the MENA region. Such alliances could enhance distribution, boost user acquisition, and lead to co-branded offerings. Yalla’s (NYSE:YALA) deep understanding of the cultural and linguistic preferences in the MENA region gives it a competitive edge, as its platforms are tailored to local tastes. With its leadership in the MENA market, strong financials, diverse product offerings, and focus on cultural adaptation, Yalla is well-positioned for continued growth. Its expanding monetization opportunities and potential for strategic partnerships make it an attractive investment for those looking to capitalize on the digital transformation of the MENA region.
Currently, Yalla (NYSE:YALA) is trading at 5.71 times its earnings, a 57.56% discount compared to the sector median of 13.46. While 0.34% of the company’s shares are shorted, 4 hedge funds held stakes in Yalla (NYSE:YALA) in the second quarter totaling $4.12 million. Renaissance Technologies is the largest shareholder, holding a $2.16 million stake as of June 30. Analysts maintain a consensus Buy rating for the stock, with an average price target of $5.70, indicating a potential upside of 42.86% from its current level.
9. Gold Fields (NYSE:GFI)
Short Interest as % of Shares Outstanding: 1.02%
Number of Hedge Fund Investors in Q2 2024: 20
Gold Fields (NYSE:GFI) is a South African gold mining company with a diverse portfolio of operations in South Africa, Western Africa, Australia, Canada, and Peru.
In the first half Gold Fields (NYSE:GFI) showed a decline in production, the company produced 954,000 ounces of gold, 22.3% lower than the same period last year. Due to the low production, the company’s all-in-sustaining costs increased by 43.86% to $1,745 per ounce, a significant rise that impacted profitability. Looking ahead, the company has revised its full-year production guidance to 2 million-2.15 million ounces, a slight reduction from its previous estimate of 2.2-2.3 million ounces. Gold Fields (NYSE:GFI) first-half results were impacted by severe weather, fatalities, and reduced mining access.
However, the company expects normalization of operations to occur in the second half of the year, driven by the resumption of mining at Gruyere Gold Mine in Western Australia and improved performance at St. Ives and South Deep gold mines. Gold Fields (NYSE:GFI) expects production to increase in the second half of the year. The company anticipates a 14% half-over-half increase in production at South Deep and a 49% increase at St. Ives.
The company is also implementing cost-saving measures to mitigate the impact of higher all-in-sustaining costs and aims to reduce costs through operational efficiencies and optimization of its mining processes. As gold prices are on the rise, Gold Fields (NYSE:GFI) is well-positioned to benefit from the current market trend. While 1.02% of the company’s shares are shorted, 20 hedge funds have maintained a bullish sentiment on the stock as of the second quarter with stakes worth $174.49 million. Analysts expect the company to increase its earnings by 19.6% this year.
8. Harmony Gold Mining (NYSE:HMY)
Short Interest as % of Shares Outstanding: 1.44%
Number of Hedge Fund Investors in Q2 2024: 17
Harmony Gold Mining (NYSE:HMY) is one of South Africa’s largest gold producers, with approximately 90% of its gold output coming from its South African mines. In addition, the company owns gold and copper assets in Papua New Guinea and Australia. Harmony Gold Mining (NYSE:HMY) focuses on acquiring high-grade mineral assets to maintain solid operating margins.
Over the past three years, Harmony Gold Mining’s (NYSE:HMY) production has remained stable, and at the start of FY2024, the management projected similar levels to the previous year. However, the company outperformed expectations, increasing gold production by 12% year-over-year in the first half of FY24 to 832,000 ounces. This growth was largely driven by an 11% improvement in recovered grades from its underground mines. The production momentum extended into the third quarter, prompting management to raise its full-year production target to 1.55 million ounces, above the original estimate of 1.38 million to 1.47 million ounces. In a recent update on August 26, Harmony Gold Mining (NYSE:HMY) reported it would reach 1.56 million ounces for the full year, reflecting a 6% year-over-year increase, with recovered grades also up 6% to 6.11 g/t.
Gold prices have recently hit a record high, driven by strong demand and favorable market conditions. J.P. Morgan Research expects gold to remain around $2,500 per ounce by the end of 2024 and rise to $2,600 per ounce in the first half of 2025. Harmony Gold is well-positioned to benefit from these high gold prices, due to its strong production growth from key underground assets, giving it an edge over competitors.
Harmony Gold Mining (NYSE:HMY) is currently trading at 8.47 times its earnings, a 47.7% discount compared to the sector median of 16.20. The company’s earnings are projected to grow by 17.8% this year. While 1.44% of the company’s shares are shorted, 17 hedge funds have maintained a bullish sentiment on the stock as of the second quarter with stakes worth $171.88 million. Kopernik Global Investors is the largest shareholder, with a stake valued at $26.90 million as of June 30.
7. DRDGOLD (NYSE:DRD)
Short Interest as % of Shares Outstanding: 1.61%
Number of Hedge Fund Investors in Q2 2024: 7
DRDGOLD (NYSE:DRD) is a gold mining company based in South Africa. The company specializes in extracting gold from surface tailings in the Witwatersrand Basin, one of the largest gold reserves in South Africa. The company operates through two primary divisions: the Ergo segment, accounting for around 60% of its total mineral reserves and 75% of its mineral resources, and the Far West Gold Recoveries (FWGR) segment. DRDGOLD (NYSE:DRD) holds approximately 5.8 million ounces in mineral reserves and 9.6 million ounces in mineral resources.
In the first half of 2024, DRDGOLD (NYSE:DRD) saw a 6.3% year-over-year drop in gold production, totaling 81,888 ounces. This contributed to a 10% rise in all-in costs, which reached $1,575 per ounce, which is high compared to industry standards. However, strong gold prices helped increase the company’s operating margin to 30.2%, with earnings growing by 10.1% to $30.8 million.
DRDGOLD (NYSE:DRD) is facing production difficulties due to delays in starting up two large sites, which were meant to replace older, exhausted ones. These delays were caused by slow approvals from authorities and problems with local communities. Both issues were resolved in January. The company is now optimistic about producing around 90,000 ounces in the second half of FY24, with all-in costs expected to fall below $1,500 per ounce due to economies of scale and reduced energy costs from its solar plant. DRDGOLD (NYSE:DRD) remains on track to meet the lower end of its FY24 production guidance of 165,000 to 175,000 ounces. Looking forward, DRDGOLD (NYSE:DRD) stands to benefit from elevated gold prices, with forecasts from Citi and Goldman Sachs predicting peaks of $3,000/oz and $2,600/oz, respectively, in the coming months.
DRDGOLD (NYSE:DRD) is also expanding its Ergo and FWGR operations, with new feeders commissioned at the Ergo plant, and ongoing projects such as a 60 MW solar facility and enhanced processing capacity at the Driefontein Plant. DRDGOLD (NYSE:DRD) is committed to reinvesting $193.2 million in infrastructure.
DRDGOLD’s (NYSE:DRD) stock is trading at 12.76 times its earnings, a 21.23% discount to the sector median of 16.20. While 1.16% of the company’s shares are shorted, 7 hedge funds have maintained a bullish sentiment on the stock as of the second quarter with stakes worth $10.55 million. Renaissance Technologies is the largest shareholder in the company and holds stocks worth $6.90 million as of June 30. Industry analysts maintain a consensus Buy rating for the stock, with an average price target of $13.25, indicating a 28.84% upside potential from its current price.
6. Sibanye Stillwater (NYSE:SBSW)
Short Interest as % of Shares Outstanding: 2.39%
Number of Hedge Fund Investors in Q2 2024: 18
Sibanye Stillwater (NYSE:SBSW) is a multinational mining and metals processing company based in South Africa. The company is one of the world’s largest producers of platinum, palladium, rhodium, and gold. Sibanye Stillwater (NYSE:SBSW) also engages in the extraction and refining of iridium, ruthenium, nickel, chrome, copper, and cobalt. Sibanye Stillwater (NYSE:SBSW) is a global leader in recycling platinum group metals (PGM), commonly known as catalytic converters. In recent years, Sibanye Stillwater (NYSE:SBSW) has expanded into the battery metals sector, focusing on mining and processing critical materials and reprocessing mining waste to recover valuable minerals.
For the quarter ending March 31, Sibanye Stillwater (NYSE:SBSW) delivered strong operational performance, particularly in its U.S. Platinum Group Metals segment, where platinum and palladium output surged 22%. The company also saw a 28% reduction in All-In Sustaining Costs (AISC), boosting adjusted EBITDA despite lower PGM prices. Production from its South African operations, including platinum, palladium, rhodium, and ruthenium, increased by 3%, driven by the acquisition of an additional 50% stake in the Kroondal mine, one of South Africa’s largest platinum reserves. Additionally, the company’s Sandouville nickel refinery reported a 42% increase in production and a 36% reduction in sustaining costs. Although gold production dipped slightly, the company maintained strong EBITDA thanks to favorable gold prices.
Sibanye Stillwater’s (NYSE:SBSW) Keliber lithium project in Finland is advancing on schedule and within budget which will position the company to benefit from rising demand for lithium and battery materials. In August, the company secured a $560 million green financing package to fund the full development of this project, including the construction of lithium mining, processing, and refining facilities.
While 2.39% of the company’s shares are shorted, 18 hedge funds have maintained a bullish sentiment on the stock as of the second quarter with stakes worth $129.07 million. Marshall Wace LLP is the largest shareholder in the company and holds stocks worth $23.12 million as of June 30. Industry analysts maintain a consensus Buy rating, with an average price target of $5.5, representing a 28.09% upside potential from its current levels.
5. InMode (NASDAQ:INMD)
Short Interest as % of Shares Outstanding: 8.04%
Number of Hedge Fund Investors in Q2 2024: 14
InMode (NASDAQ:INMD), an Israeli company, specializes in developing, manufacturing, and marketing cutting-edge medical technologies, with a focus on radio-frequency (RF) technology. The company has 10 patented innovations designed to enhance minimally invasive procedures and improve traditional surgical techniques across various medical fields. InMode’s (NASDAQ:INMD) technologies are widely used by professionals in plastic surgery, gynecology, dermatology, ENT, and ophthalmology. These products enable doctors to perform procedures with greater precision, shorter recovery times, and less invasiveness compared to conventional surgeries.
On July 17, InMode (NASDAQ:INMD) received FDA 510(k) clearance for its Morpheus8 technology, making it the first fractional RF micro-needling device approved for soft tissue contraction. This clearance expands the Morpheus8 Applicators’ use in dermatologic procedures requiring soft tissue coagulation or hemostasis. InMode (NASDAQ:INMD) has also introduced the IgniteRF and OptimasMAX platforms that use Morpheus8 handpieces for minimally invasive RF and intense pulsed light skin treatments. These developments are expected to drive higher adoption of Morpheus8, increasing the company’s earnings potential. With over 2.5 million procedures performed globally and strong consumer demand, these advancements solidify InMode’s (NASDAQ:INMD) leadership in the market and are poised to boost its financial performance and market share.
InMode (NASDAQ:INMD) is implementing a multifaceted strategy to drive sales, focusing on its new systems like the Optimus Max and IgniteRF platforms, which offer advanced technology and user-friendly features. These systems complement existing platforms such as BodyTite, FaceTite, and NeckTite, providing doctors with a versatile suite of tools. The company is also offering selective trade-in programs for customers with fully paid-off systems, encouraging upgrades to Optimus Max. InMode (NASDAQ:INMD) is leveraging a large sales team and distributor network across 96 countries to drive international sales. The company is actively combating counterfeit products, particularly Chinese copies of popular systems like Morpheus8, through legal action.
InMode (NASDAQ:INMD) is trading at 9.43 times its earnings, a 57.10% discount to the sector median of 21.97. While 8.04% of the company’s shares are shorted, 14 hedge funds have maintained a bullish sentiment on the stock as of the second quarter with stakes worth $117.68 million. Renaissance Technologies is the largest shareholder in the company and holds stocks worth $37.72 million as of June 30.
4. Mobileye (NASDAQ:MBLY)
Short Interest as % of Shares Outstanding: 12.57%
Number of Hedge Fund Investors in Q2 2024: 28
Mobileye (NASDAQ:MBLY), headquartered in Israel, specializes in advanced driver-assistance systems (ADAS) and autonomous driving technologies. The company is majority-owned by Intel, and its vision-based systems are integrated into millions of vehicles from over 50 automakers, including Ford, General Motors, Honda, Nissan, BMW, Audi, and Volkswagen, helping to enhance both safety and driving efficiency.
In Q2, Mobileye (NASDAQ:MBLY) saw an impressive 84% quarter-over-quarter increase in revenue, reaching $439 million. However, the company decreased its full-year outlook to $1.7 billion, compared to previous estimates of $1.83 billion, due to market weakness in China. Despite this, the company remains optimistic about its long-term growth, with strong volume expectations for 2025 and beyond, particularly from Western and Chinese original equipment manufacturers (OEMs) as they roll out Mobileye’s (NASDAQ:MBLY) advanced system, known as SuperVision.
Mobileye (NASDAQ:MBLY) is well-positioned to benefit from the shift toward more advanced, higher-priced systems. The company has identified key drivers for long-term growth in the ADAS market, with systems like EyeQ6, a custom hardware and software solution for ADAS and autonomous systems, expected to boost average selling prices and drive significant growth. Additionally, Mobileye’s (NASDAQ:MBLY) Road Experience Management (REM) system enhances real-time road data collection, improving the safety and effectiveness of autonomous driving. The company’s Responsibility Sensitive Safety (RSS) model and True Redundancy approach offer greater reliability in autonomous systems compared to competitors who focus solely on camera-based solutions. By incorporating radar and lidar systems, Mobileye (NASDAQ:MBLY) lidar systems deliver more accurate, higher-value solutions.
According to a report by Markets and Markets, the global ADAS market to grow from 334 million units in 2024 to 655 million units by 2030, at a CAGR of 11.9%. Given Mobileye’s (NASDAQ:MBLY) cutting-edge systems, expanding customer base, and strong market presence, the company is poised for significant upside potential. While 12.57% of the company’s shares are shorted, 28 hedge funds have maintained a bullish sentiment on the stock as of the second quarter with stakes worth $455.40 million.
3. UroGen Pharma (NASDAQ:URGN)
Short Interest as % of Shares Outstanding: 16.87%
Number of Hedge Fund Investors in Q2 2024: 25
UroGen Pharma (NASDAQ:URGN) is an Israeli biopharmaceutical company specializing in solutions that treat urothelial and specialty cancers. The company is developing non-surgical options that enhance patient outcomes.
The company has developed RTGel, a reverse-thermal hydrogel, that delivers medications directly to the urinary tract and has the potential to improve the therapeutic profiles of existing drugs. The company’s flagship product, JELMYTO, leverages this RTGel technology and has demonstrated remarkable clinical results, including a 58% complete response rate for low-grade upper tract urothelial cancer. This innovation is noted for its durable, long-lasting effects, making it a significant advancement in treating cancer.
UroGen Pharma’s (NASDAQ:URGN) UGN-102 is currently under FDA review and targets a $5 billion market for low-grade intermediate-risk non-muscle invasive bladder cancer (LG-IR-NMIBC). Approval for UGN-102 is anticipated as early as Q1 2025. The company will provide 12-month durability of response results from patients who exhibited a complete response at three months following six weekly instillations of UGN-102. Additionally, UroGen Pharma (NASDAQ:URGN) is developing UGN-301, a potential treatment for high-grade bladder cancer.
If approved, UGN-102 will position UroGen Pharma (NASDAQ:URGN) as a leader in the urological oncology space and help the company enhance its revenue potential and strengthen its position as an innovator in bladder cancer therapies.
While 16.87% of the company’s shares are shorted, 25 hedge funds have maintained a bullish sentiment on the stock as of the second quarter with stakes worth $329.33 million. Adage Capital Management is the largest shareholder in the company and owns stocks worth $55.37 million.
2. ZIM Shipping (NYSE:ZIM)
Short Interest as % of Shares Outstanding: 17.00%
Number of Hedge Fund Investors in Q2 2024: 26
ZIM Shipping (NYSE:ZIM) is an Israeli company that specializes in containerized cargo shipping. The company operates one of the largest shipping networks in the world and provides a full range of shipping solutions to more than 32,000 customers at approximately 300 ports in 90 countries.
In the first half of 2024, ZIM Shipping (NYSE:ZIM) reported that its revenues increased 30% year-over-year to $3.5 billion, due to an increase in average freight rates, which stood at $1,674 per TEU in Q2. In Q2, ZIM Shipping’s (NYSE:ZIM) carried volume increased to 952,000 TEU, marking an 11.7% increase compared to the same quarter last year and a 13% increase compared to the first quarter of 2024. ZIM Shipping (NYSE:ZIM) has a fleet of 148 vessels, including 132 container ships and 16 car carriers, and has a capacity of 755,000 TEUs.
The company is replacing its older vessels with larger, new-builds through its fleet renewal program, of which 38 of the 46 new-build container ships have already been delivered. These new vessels are fuel-efficient as they use liquefied natural gas (LNG) and are better suited for the company’s trade routes. This helps the company to reduce costs, and improve fuel efficiency.
While 17% of the companies shares are shorted, 26 hedge funds have maintained a bullish sentiment on the stock as of the second quarter, with stocks worth $455.13 million. D E Shaw is the largest shareholder in the company, holding $107.43 million worth of stock as of June 30. Industry analysts expect the company to grow its earnings by 100% this year and maintain a consensus Buy rating, with an average price target of $20.03, representing a 12.5% upside potential from its current levels.
1. Fiverr (NYSE:FVRR)
Short Interest as % of Shares Outstanding: 17.31%
Number of Hedge Fund Investors in Q2 2024: 19
Fiverr (NYSE:FVRR) is an Israeli company that operates a global marketplace for freelance services, connecting freelancers with clients worldwide. The company’s platform caters to both individuals and businesses seeking to outsource various tasks.
Fiverr (NYSE:FVRR) has introduced AI-driven tools such as Neo and has launched a profession-based catalog that lets freelancers showcase their unique skills and expertise more effectively. The company also launched a profession-based catalog, that lets freelancers showcase their skills and expertise more effectively.
According to a report from the Business Research Company, the global freelance platforms market at $7.49 billion in 2024, with projections to reach $13.92 billion by 2028, growing at a CAGR of 16.8%. Fiverr (NYSE: FVRR), with its strong global presence and wide range of freelance services, is well-positioned to benefit from the rapid growth of the freelance platform market and the rising demand for flexible, on-demand work solutions.
On July 31, as a strategic move to enhance its eCommerce offerings, Fiverr (NYSE:FVRR) announced the acquisition of AutoDS, a leading dropshipping automation tool that provides a subscription-based platform that helps drop shippers with product research, sourcing, inventory management, and automated fulfillment. This acquisition benefits Fiverr by a new subscription revenue stream and creating strong synergies for accelerated growth in its dropshipping and e-commerce services.
It also brings tens of thousands of drop shippers into Fiverr’s (NYSE:FVRR) ecosystem, expanding its customer base and increasing its presence in the growing e-commerce market. Additionally, Fiverr (NYSE:FVRR) is transforming from a freelance marketplace to a comprehensive digital platform, offering both access to talent and software solutions. As the global dropshipping market is projected to surpass $2 trillion by 2033, this acquisition strengthens Fiverr’s (NYSE:FVRR) position to capitalize on the expanding industry.
For Q2 2024, Fiverr (NYSE:FVRR) reported a revenue of $94 million, marking a 6% increase year-over-year. The company’s gross margin rose to 83.1%, up from 82.5% the previous year. Although the number of active buyers fell by 8% to 3.9 million, Buyer Spend per Active User grew by 10%. Free cash flow also saw a 12% year-over-year increase, reaching $20.7 million.
While 17.37% of the company’s shares are shorted, 19 hedge funds have maintained a bullish sentiment on the stock, with stakes worth $90.53 million as of the second quarter. Engine Capital is the largest shareholder in the company, holding $19.07 million worth of stock as of June 30.
While we acknowledge the potential of Fiverr (NYSE:FVRR) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FVRR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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