I've Been Wrong About Fiverr International Stock for 3 Years. Here's Why I'm Finally Changing My Mind.

Three years ago, I argued that the incoming generative AI revolution would be a tailwind for Fiverr International (NYSE: FVRR). The thesis was straightforward: as AI tools proliferated, demand for skilled freelancers who could wield them effectively would grow. Fiverr's marketplace would benefit. The stock should follow. I would look very smart.

Well, Fiverr is not making me look smart at all in 2026.

Image source: The Motley Fool.

A thesis in ruins

As it turns out, when you give everyone access to tools that can write copy, generate logos, and spit out basic code, fewer people pay freelancers to do those things. Fiverr's annualized active buyers dropped from 3.4 million in Q2 2025 to 2.7 million in the comparable period this year. Writing and translation revenue fell 24% year over year, largely due to AI tools handling those tasks.

As of Oct. 27, my Fiverr shares are down by 88.6% in five years. I bought those shares before the generative AI boom started, and I held firm as the new threat developed. The thesis didn't just fail; it failed in the exact opposite direction I predicted. AI didn't elevate freelancers; it replaced the low-value tasks that constituted much of Fiverr's transaction volume.

So here I am, three years later, admitting I got the big call wrong. I was wrong about AI being a tailwind. But that's not the same as being wrong about the stock.

And I haven't sold a single share.

Why I'm still holding

This probably requires explanation.

First, there's the rock-bottom valuation. Fiverr trades below its cash value. The company holds $308.5 million in cash and investments against a $293 million market cap. Price-to-book sits at 0.67; price-to-free-cash-flow at 3.17. At these prices, investors are essentially arguing that they would be better served if Fiverr sold its assets and paid a gigantic dividend instead of running the business.

Second, I like cash generation. Despite revenue declines, Fiverr produced $92.5 million in trailing-twelve-month free cash flow. The company isn't burning cash these days, but adding to a substantial cash pile.

Today, the stock trades at $8.15 per share. The company has $7.06 per share in cash reserves (and rising). You're essentially paying a dollar and change for a profitable, cash-flow-positive business with 81% gross margins and no meaningful debt.

CEO Micha Kaufman is pivoting toward high-value, complex projects -- the kind that AI can't easily replicate. Projects over $1,000 grew 13% last quarter. The company cut 30% of its workforce to save $30 million annually and refocus on a changing market. It's painful, but it's not irrational.

Will it work? I genuinely don't know. On Fiverr's Q2 earnings call, management said the company's new strategy will take six quarters to show results. That's early 2028. A lot can go wrong between now and then, and no cash machine runs forever.

So yeah, I was wrong about AI's effects on Fiverr's business. I wouldn't tell anyone to buy this stock today. The risk is real, the timeline is long, and much smarter investors than I have already walked away.

A lottery ticket with a cash cushion

But here's the thing: my shares are in a tax-protected IRA. Selling doesn't generate a useful loss. And at this valuation, I'm basically holding a lottery ticket attached to $300 million in cash and zero debt.

The original thesis failed. The turnaround thesis is unproven. At this valuation, I'm willing to wait and see which story plays out. The math says there's more to gain by waiting than by walking away.

Anders Bylund has positions in Fiverr International. The Motley Fool has positions in and recommends Fiverr International. The Motley Fool has a disclosure policy.