Freelancer Ltd.: Core Business Is Not Competitive Enough (OTCMKTS:FLNCF)

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OverviewFreelancer Ltd. (OTC:FLNCF, ASX: FLN) is an Australian-based technology company in freelance marketplace services. Since its founding in 2009, it has acquired various businesses within the gig economy, such as Escrow.com, vWorker, and ScriptLance, to support its vision of being a global player. Freelancer also boasts the largest freelancing platform in the world by the number of users. However, the core freelancing business GPV, revenue growth, and bottom line have been lackluster, as costs have grown faster than revenue in recent times. Consequently, we believe the share price has been punished over time. The stock is recently trading at ~AUD 0.43, down almost 80% from its 2013 IPO price at AUD 2.5. We would be careful about the opportunity and initiate our coverage with a Neutral rating on the stock. Risk We believe that Freelancer has been facing pressure from the increasing competition in the freelancing market over the last decade, as players like Fiverr (FVRR) and Upwork (UPWK) have gone public and have been investing aggressively to gain market share globally. Both companies are now the two largest players in the world by revenue. Fiverr and Upwork had revenues of +$100 million and $300 million last year, as both of them have consistently increased …

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