We came across a bearish thesis on Fiverr International Ltd. (FVRR) on Substack by Kostadin Ristovski, ACCA. In this article, we will summarize the bears’ thesis on FVRR. Fiverr International Ltd. (FVRR)’s share was trading at $25.67 as of March 5th. FVRR’s trailing and forward P/E were 53.48 and 11.64 respectively according to Yahoo Finance.
A freelancer typing at a laptop, coffee in hand, at an outdoor cafe with a view of the city skyline.
Fiverr, once a dominant force in the freelance gig economy, is now facing a major existential threat. The company, founded in 2010, built its brand on low-cost microtasks but has since evolved into a broader marketplace for freelance services, with projects ranging from simple gigs to complex professional assignments. However, the rise of large language models (LLMs) has fundamentally altered this landscape, automating many of the microtasks that Fiverr thrives on. As AI continues to improve, Fiverr risks losing relevance, with many services being reduced to simple AI-generated outputs.
Fiverr generates revenue through two main streams: marketplace revenue, which takes a cut of transactions between buyers and sellers, and service revenue, which includes advertising, subscriptions, and fees. While marketplace revenue has stagnated, service revenue has surged, doubling from $41 million in 2022 to $88 million in 2024, driven largely by increased monetization efforts. However, this growth is artificial—Fiverr is extracting more revenue from sellers rather than expanding its marketplace, leading to a higher take rate of 36%, one of the most aggressive in the industry. This approach is unsustainable, as platforms thrive by increasing transaction volume, not by squeezing existing participants.
Fiverr’s response to AI disruption is “Fiverr Go,” an ambitious AI-driven platform allowing sellers to train their own models for content creation. It offers AI-generated images, audio, and chatbot-powered personal assistants, promising sellers greater efficiency. However, this strategy has a critical flaw: if AI can replace low-cost freelancers, why shouldn’t Fiverr create its own models and eliminate sellers altogether? More importantly, why should buyers use Fiverr instead of established AI tools like ChatGPT or ElevenLabs? The high cost of Fiverr’s AI services, combined with their questionable differentiation, makes this pivot unlikely to secure long-term success.
The company’s struggles are evident in its financials—growth has slowed, active buyers are declining, and Fiverr is increasingly dependent on service revenue rather than organic marketplace expansion. With AI rapidly replacing many gig-based services and competitors specializing in niche AI offerings, Fiverr is on the defensive. Betting on Fiverr now means believing that its hybrid AI-human model will outperform pure AI solutions, and that buyers will continue to prefer human freelancers over AI-generated alternatives. However, the evidence suggests Fiverr is being disrupted, and its future as a major player in the freelance economy is in serious doubt.
Fiverr International Ltd. (FVRR) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held FVRR at the end of the fourth quarter which was 15 in the previous quarter. While we acknowledge the risk and potential of FVRR as an investment, our conviction lies in the belief that some 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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Disclosure: None. This article was originally published at Insider Monkey.