Fiverr Drops Near Double Digits on ChatGPT Threat

On little specific news, Fiverr (US:FVRR) — an online platform that connects freelancers with businesses that seek temporary or short-term assistance — fell sharply on the midweek session, losing nearly 10% of equity value. In early pre-market activity on Thursday, FVRR stock is clawing back a small part of that decline.

In the trailing week, FVRR stock shed 17.74% as investors have become jittery regarding the possible negative impact of OpenAI’s artificial-intelligence-based chatbot ChatGPT.

Earlier this week, the share price of education technology specialist Chegg (US:CHGG) halved after managment admitted ChatGPT was stealing its market share.

As Fox Business pointed out earlier in the week, search queries on Fiverr related to leveraging the potential of AI skyrocketed. The news agency noted that, “Fiverr’s Spring 2023 Business Trends Index shows that searches for AI-related services have increased as more businesses became aware of new opportunities to integrate this technology.”

AI Services Demand

Intriguingly, Fiverr reported that earnings for freelancers who offered AI services tied to programming and technology (such as AI app development) generated the majority of revenue for the broader AI services category.

A WordFinder survey recently found that almost one in four employed Americans reported using ChatGPT for work, just months after it was released to the public.

Nevertheless, the dramatic spike in interest toward ChatGPT presents a double-edged sword for FVRR stock. Essentially, companies can theoretically utilize AI-content generation for building a digital presence or initiating an email marketing drive. With limitless uses delivered on demand and (for now) without charge, would-be contract-signing entities and employers can sidestep human freelancers altogether.

Still, bearish traders may be overstating the broader negative impact of ChatGPT against FVRR stock and its ilk. As Euronews reported in January of this year, ChatGPT can be an accretive tool in the academic world but students can also abuse the technology. However, professors and education professionals have caught on, red-flagging potential AI misuses due to their inaccuracies or structural quirks.

More significantly, enterprises may also leverage AI to identify AI-generated content. With machines being able to occupy both the active and passive realms of content generation, any backhanded scheme to fool enterprise-level clients may risk exposure and possibly legal damage.

Short Candidate

Another factor that may dissuade traders from directly targeting FVRR stock is that it could become a candidate for a short squeeze. According to data compiled by Fintel, FVRR’s short interest has hit 9.36% of its float. Also, its off-exchange short volume ratio reached 49.38%.

Moreover, FVRR stock scored 74.41 out of 100 in Fintel’s proprietary Short Squeeze Score. That’s the number, ranging from 0 to 100, that above 50 indicates a higher risk of a short squeeze relative to its peers.

Finally, options sentiment for FVRR stock is somewhat bullish, featuring a put/call ratio of 0.73. Since puts generally represent bearish bets, ratios less than one indicate optimism.

This article originally appeared on Fintel

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