We recently compiled a list of the 10 Worst Middle East and Africa Stocks To Buy According to Short Sellers. In this article, we are going to take a look at where Fiverr (NYSE:FVRR) stands against the other Middle East and Africa stocks.
Moderate Growth Amidst Challenges
According to the IMF’s Middle East and North Africa Economic Update from April 2024, the MENA region is expected to see moderate growth of 2.7% in 2024, up from 1.9% in 2023. Both oil-importing and oil-exporting countries in the region are projected to grow at similar rates, with the gap between the Gulf Cooperation Council (GCC) economies and developing oil importers (excluding Egypt) expected to be around 1%. The region’s GDP per capita is forecasted to increase by only 1.3% in 2024, primarily driven by the GCC nations. However, ongoing conflicts continue to weigh on the region’s economic activity, especially in Palestine. Gaza’s economy, for instance, saw an 86% decline in Q4 2023 compared to the same period in 2022. Trade disruptions, notably through the Suez Canal, have also affected regional and global commerce.
Over the last decade, many MENA economies have faced rising debt-to-GDP ratios, particularly among oil-importing countries, which struggle to reduce these ratios due to high oil prices. The inability to lower debt through inflation, exacerbated by exchange rate fluctuations and off-budget factors (stock-flow adjustments), underscores the need for greater debt transparency. In contrast, oil-exporting nations tend to see smaller increases in debt-to-GDP ratios during periods of high GDP growth, and in some cases, a decrease.
Meanwhile, private equity (PE) and venture capital (VC) investments have gained momentum in the Middle East and Africa, reflecting a shift in investment trends. Data from Preqin and the Dubai International Financial Centre (DIFC) reveals that about 65% of regional investors plan to maintain or increase their exposure to private equity in 2024, with 56% expressing similar interest in venture capital.
Despite the challenges posed by geopolitical tensions, venture capital continues to play a crucial role in the region’s investment landscape. Investors remain optimistic, with many reporting that their PE and VC investments have met or exceeded expectations. Key sectors attracting interest include fintech, technology, healthcare, and infrastructure.
As the region navigates the complexities of economic growth, debt management, and investment trends, it’s clear that there are both challenges and opportunities on the horizon. Investors remain optimistic about the region’s potential, however, it’s essential for policymakers to prioritize debt transparency, economic diversification, and infrastructure development to unlock the full potential of the MENA region’s economies. With that in context, let’s take a look at the 10 worst Middle East and Africa stocks to buy according to short sellers.
Our Methodology
For this article, we used a Finviz stock screener to find 20 large companies in the Middle East and Africa, by market cap. From that list, we shortlisted companies that have the highest percentage of shares outstanding that were sold short. The list is sorted in ascending order of their short interest. We also mentioned the hedge fund sentiment around each stock.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A freelancer typing at a laptop, coffee in hand, at an outdoor cafe with a view of the city skyline.
Fiverr (NYSE:FVRR)
Short Interest as % of Shares Outstanding: 17.31%
Number of Hedge Fund Investors in Q2 2024: 19
Fiverr (NYSE:FVRR) is an Israeli company that operates a global marketplace for freelance services, connecting freelancers with clients worldwide. The company’s platform caters to both individuals and businesses seeking to outsource various tasks.
Fiverr (NYSE:FVRR) has introduced AI-driven tools such as Neo and has launched a profession-based catalog that lets freelancers showcase their unique skills and expertise more effectively. The company also launched a profession-based catalog, that lets freelancers showcase their skills and expertise more effectively.
According to a report from the Business Research Company, the global freelance platforms market at $7.49 billion in 2024, with projections to reach $13.92 billion by 2028, growing at a CAGR of 16.8%. Fiverr (NYSE: FVRR), with its strong global presence and wide range of freelance services, is well-positioned to benefit from the rapid growth of the freelance platform market and the rising demand for flexible, on-demand work solutions.
On July 31, as a strategic move to enhance its eCommerce offerings, Fiverr (NYSE:FVRR) announced the acquisition of AutoDS, a leading dropshipping automation tool that provides a subscription-based platform that helps drop shippers with product research, sourcing, inventory management, and automated fulfillment. This acquisition benefits Fiverr by a new subscription revenue stream and creating strong synergies for accelerated growth in its dropshipping and e-commerce services.
It also brings tens of thousands of drop shippers into Fiverr’s (NYSE:FVRR) ecosystem, expanding its customer base and increasing its presence in the growing e-commerce market. Additionally, Fiverr (NYSE:FVRR) is transforming from a freelance marketplace to a comprehensive digital platform, offering both access to talent and software solutions. As the global dropshipping market is projected to surpass $2 trillion by 2033, this acquisition strengthens Fiverr’s (NYSE:FVRR) position to capitalize on the expanding industry.
For Q2 2024, Fiverr (NYSE:FVRR) reported a revenue of $94 million, marking a 6% increase year-over-year. The company’s gross margin rose to 83.1%, up from 82.5% the previous year. Although the number of active buyers fell by 8% to 3.9 million, Buyer Spend per Active User grew by 10%. Free cash flow also saw a 12% year-over-year increase, reaching $20.7 million.
While 17.37% of the company’s shares are shorted, 19 hedge funds have maintained a bullish sentiment on the stock, with stakes worth $90.53 million as of the second quarter. Engine Capital is the largest shareholder in the company, holding $19.07 million worth of stock as of June 30.
Overall FVRR ranks 1st on our list of the worst Middle East and Africa stocks to buy according to short sellers. While we acknowledge the potential of FVRR as an investment, our conviction lies in the belief that 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.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.