What happened
Shares of Fiverr International (NYSE: FVRR), a platform for freelance services, soared 23.7% this week, according to data from S&P Global Market Intelligence, as investors digested the latest Federal Reserve interest rate. The Fed increased the rate by just 25 basis points.
But despite Fiverr's meteoric share price rise this week, the gig economy stock is still down 46% over the past 12 months.
So what
Investors took the Fed's latest interest rate hike as a positive sign for both inflation and the economy. The previous six interest rate increases have been well above 25 basis points over the past year, and a lower rate hike comes as the pace of inflation is slowing down.
Fiverr investors took that as an optimistic sign that the economy might be able to avoid a significant slowdown and that the Fed is doing a good job tamping down inflation.
But Fiverr's share price also lost a little bit of ground this morning after the January jobs report showed that the U.S. economy added 517,000 jobs in January, much higher than the 187,000 jobs most economists expected the economy would add during the month.
While job growth is a good thing for the economy, it could also encourage the Fed to continue hiking rates.
Now what
While Fiverr investors are no doubt celebrating this week's share price gains, the stock is still down by 47% over the past year, and the company is facing some significant headwinds.
The pace of growth for new buyers coming to the platform has nearly all but dropped off over the past several quarters. Additionally, revenue increased just 11% in the most recent quarter to $82.5 million, down significantly from growth of 42% in the year-ago quarter.
So while it's good to see Fiverr's share price moving up this week, investors may still want to be cautious with this stock.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Fiverr International. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
