Investing.com -- Fiverr (NYSE:FVRR) shares were down 4% in pre-open trade on Monday after BTIG downgraded its rating on the stock to "neutral" from "buy," citing a shift in the risk-reward profile that tempered its enthusiasm for further gains. 

The brokerage also removed Fiverr from its ‘Top Pick’ list for the second half of 2024, as recent growth in Fiverr's share price led BTIG to conclude that limited upside remained in the near term.

As per BTIG analysts, Fiverr's stock surged by 35% over the past week and has climbed nearly 29% since late June, outperforming the S&P 500 index's gain of around 5% during the same period. 

Despite this strong performance, the analysts expressed reservations about the platform’s potential for additional growth. 

Among the concerns were a muted outlook for hiring in small-to-medium-sized businesses in 2025, potential impacts from artificial intelligence innovations, and a slowdown in freelance job postings after a mid-summer boost​.

The valuation of Fiverr, at around 10 times its estimated adjusted EBITDA for fiscal year 2025, also factored into BTIG's rating adjustment. 

The analysts noted that the current valuation aligned with industry averages and reflected fair market value given the factors influencing Fiverr's prospects. 

The brokerage emphasized that recent gains in the stock price were primarily due to multiple expansion rather than substantial growth in projected earnings. 

Moreover, concerns about high stock-based compensation, which represents around 19% of Fiverr’s revenue, weighed on BTIG’s outlook as it limits the effectiveness of potential valuation adjustments within the sector​.

Going forward, BTIG pointed to uncertainty around macroeconomic influences on SMB hiring and the role of AI, particularly the rise of AI "agents" that can take on tasks traditionally completed by freelancers. 

While these agents may not yet be able to match the complexity of human-performed tasks, the brokerage suggested they could present a disruptive force in the freelancing market over time.

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