What Happened?

A number of stocks fell in the afternoon session after a steeper-than-anticipated drop in U.S. consumer confidence raised alarms about future consumer spending. 

The Conference Board reported its consumer confidence index fell to 94.2 in September, its lowest reading since April. The decline was attributed to growing pessimism among Americans regarding inflation and a weakening job market. This data is particularly concerning for companies reliant on discretionary spending, such as those in online retail, travel, and the gig economy, as reports suggest a bleak consumer outlook could curb spending on non-essential items and services. The survey's Expectations Index, a measure of short-term outlook, has remained below a key threshold that often signals a future recession, adding to investor concerns about the economic landscape.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Gig Economy company Fiverr (NYSE: FVRR) fell 4.9%. Is now the time to buy Fiverr? Access our full analysis report here, it’s free.
• Online Retail company Carvana (NYSE: CVNA) fell 3.6%. Is now the time to buy Carvana? Access our full analysis report here, it’s free.
• Consumer Subscription company Coursera (NYSE: COUR) fell 3.2%. Is now the time to buy Coursera? Access our full analysis report here, it’s free.
• Online Marketplace company LegalZoom (NASDAQ: LZ) fell 4.2%. Is now the time to buy LegalZoom? Access our full analysis report here, it’s free.
• Social Networking company Pinterest (NYSE: PINS) fell 4%. Is now the time to buy Pinterest? Access our full analysis report here, it’s free.

Zooming In On Fiverr (FVRR)

Fiverr’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 11 days ago when the stock gained 8.9% on the news that an analyst from BTIG upgraded the stock and pointed to the financial benefits of a recent corporate restructuring. 

The investment firm boosted its rating on the freelance marketplace from 'Neutral' to 'Buy' and set a new price target of $31. This move followed Fiverr's recent announcement of a major restructuring that trimmed its workforce by about 30%. The company stated the changes were not due to business weakness but part of a strategic pivot to become an "AI-first" company. BTIG noted the plan would create about $30 million in cost savings. The firm projected that these savings could boost future earnings significantly, even though Fiverr planned to reinvest about half of the funds to spur growth. Investors cheered the analyst's vote of confidence in the company's new direction.

Fiverr is down 25% since the beginning of the year, and at $24.03 per share, it is trading 32.2% below its 52-week high of $35.45 from December 2024. Investors who bought $1,000 worth of Fiverr’s shares 5 years ago would now be looking at an investment worth $172.89.

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