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Summary
It seems workers are wary of marrying with a company for life and instead are seeking changes and new challenges. As of January 2020, the median number of years that wage and salary workers had been with their current employer was just 4.1 years.
The success of the streaming video and music platforms is based on allowing users to decide what to see or what to listen and when to do it. Similarly, the work industry is experiencing a significant transformation thanks to the rise of the “Gig Economy” or “Freelance Economy." On one side, people increasingly want to have the opportunity to decide when, where and how to work, and on the other side, companies are looking for flexibility, light capital models and an on-demand workforce. As a result, and accelerated by the COVID-19 pandemic, freelancing is challenging the traditional concept of a full-time job.
Based on this secular trend, Fiverr International Ltd (NYSE:FVRR) presents an opportunity for investors. Fiverr is an online marketplace offering on-demand freelance services to individuals and businesses. Founded in 2010, it has been exponentially growing thanks to the rise in the gig economy. Currently, Fiverr, with its more than 4 million active users and +$1b GMV, is seen as having a lot of potential to become a key player in the future as it is the first in the queue and it has, already, a considerable network of early-adapters loyal buyers and sellers.
Throughout this investment thesis we would like to help the reader understand the secular trend backing the long-term growth of the industry, Fiverr's historical performance and its long-term strategy, and why do we think Fiverr is a good opportunity by translating our expectations into numbers and by carrying out what we believe is a reasonable intrinsic valuation of Fiverr.
Gig Economy – As the main driver
The Gig economy is projected to growth at a double-digit annual rate, with drivers from both the supply and demand side gig platforms continuously expanding geographically and offering new services to consumers. In 2018, according to the report release by Mastercard in May19, the market size was estimated to amount to $204b globally and it was expected to growth at least at a 17.4% CARG until FY23E.

“Mastercard Gig Economy Industry Outlook and Needs Assessment” report
Currently, the Gig Economy in itself can be divided into four different sectors.
Transportation-based services: including platforms as UBER, Lyft, Grab, etc. (57.8% of the total Gig economy in 2018).
Asset-sharing services: major players include Airbnb, Tripadvisor rentals, etc. (30.% of the total Gig economy in 2018).
Handmade Goods, Household and Miscellaneous Services: mostly comprised by niche platforms focused on on-demand services like TaskRabbit or Etsy among others. (8.2% in 2018).
Professional services: companies like Fiverr or Upwork will belong to this sector. (3.8% in 2018).
As it can be observed, transportation-based and asset-sharing services are the current leaders as they were the forerunners of the industry. Nevertheless, other verticals as professional services should catch-up over time.
Fiverr's TAM and industry outlook
The penetration of the freelance model is rising at an exponential rate year by year. According to Fiverr and supported by other relevant industry reports, the freelance economy represents a large market opportunity with still very low online penetration. Just in the US, according to the latest US Census Bureau Nonemployer Statistics data, the estimated US total freelance income amounted to $815b out of which $115b includes professions subject to be penetrated by Fiverr and other freelancing platforms.
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