Last week, I sent some cash to an old brokerage account of mine. The market was sagging and I saw buying windows everywhere, so why not take advantage of low stock prices while revisiting an old trading platform?
It turned out that my account had been closed for inactivity, but the money transfer still went through as planned. There I was with a significant chunk of cash stuck in a service that wouldn't let me put it to work in the market.
So I hopped on the phone with customer support and worked out a plan. The incoming cash would be frozen for a few days while the old account was going through the reopening steps. The representative apologized profusely for the inconvenience and the delay. I had to laugh at that point.
"No worries," I told the service rep. "Market timing is more like gambling than investing, anyway. I don't mind the delay."
The brokerage agent seemed perplexed by my cheerful reaction, but chuckled along with me and agreed that market timing really isn't investing.
The market kept sliding after that phone call and every ticker on my list of planned buys are now even cheaper. The extra discounts range from 3% to 11% in the span of five short market days.
Patience is a virtue. Image source: Getty Images.
Now that I can actually make those trades, I'll throw another spanner in my own wheels. The fact that I wrote this article will stop me from touching the two tickers below for another couple of days. The Foolish disclosure policy can feel harsh sometimes, but then again, I often find that the forced delay only lets me make the trades I wanted at an even better price. It's a counter-intuitive kind of magic.
So let me tell you why I'm itching to invest more of my hard-earned dollars in Netflix (NFLX -3.92%) and Fiverr International (FVRR 1.34%) right now. Market timing may be a joke but there's nothing wrong with taking advantage of great prices on stocks of fantastic quality. My twitchy trading finger will have to wait.
A tale of two crashes
Fiverr's stock has fallen 89% from the all-time highs of February 2021. The S&P 500 (^GSPC 0.02%) market index traded flat over the same period:
For Netflix, we are looking at a 74% discount from the highs of late October 2021. The market has taken a 15% haircut since then, but Netflix's plunge makes that correction look like a quiet walk in the park:
As you can see, the two downward trends are actually quite different. Netflix's price drops have followed after the last two earnings reports, where the media-streaming giant revealed that the rampant subscriber growth of yesteryear has turned into customer defections in 2022. For investors who built their Netflix thesis around everlasting subscriber growth, this was an unforgivable blunder.
Fiverr's greatest error is found on the top line, where the accelerated hypergrowth of the COVID-19 lockdown era has started to peter out. The freelance services marketplace saw year-over-year revenue growth of 27% in the first quarter, down from 43% in the previous quarter and a straight-up doubling in the year-ago period.
Current business challenges
Both Fiverr and Netflix are indeed facing some significant challenges right now.
Netflix works in an incredibly crowded market, which may have undermined the company's famed pricing power. At the same time, the company is knee-deep in a strategy shift that moves the long-term focus away from optimal subscriber growth. Instead, Netflix is paying more attention to profitability and cash flows. Some might say that shared logins reduced the revenue stream, but that's the wrong way to look at it. Account-sharing has been around since Netflix started its streaming services, so it's not a new problem. Management has simply chosen to start addressing this issue at long last.
For Fiverr, many investors assume that the company has reached the lockdown-powered pinnacle of its business prospects and it's all downhill from here. From this perspective, Fiverr's top line must slow down drastically while profit-oriented metrics crash through the floor. Everyone is going back to ordinary day jobs just like before, right? Therefore, the high-flying stock had to be taken down to earth again.
Why aren't those issues deal-breakers, then?
Market makers took one quick look at Netflix and Fiverr, decided that they didn't like what's going on right now, and erased most of the market value in these stocks.
But the bears also ignored a plethora of signs that Fiverr and Netflix are going through some short-lived difficulties here. There is nothing wrong with the long-term value these companies are building, and I am convinced that the stocks will bounce back with a vengeance from these rock-bottom prices.
Media-streaming services are the future of the entertainment industry, but old-school broadcast and cable TV still account for a majority of the time consumers spend on video content. There's a ton of market share left to steal from the previous generation's broadcasters, and Netflix remains a global leader in that long-term chase.
Don't forget that Fiverr is adding users on both sides of the freelancing service provider and client sides of the gig-finding equation. The company projected milder growth in the upcoming second-quarter period, but the back half of 2022 should pick up the pace again. Fiverr is also exploring new service categories and expanding into untouched geographic markets. The gig economy is here to stay and Fiverr is ready to take advantage of this epic sea change. In many ways, Fiverr's market position today reminds me of Netflix in the early days of the media-streaming revolution.
So I'm downright excited to see these two top-shelf stocks trading at ridiculous discounts to their long-term shareholder value. You can bet that I will get around to hitting that buy button someday soon, if I could only stop recommending them to you. But patience is a wealth-building virtue, so don't worry about my portfolio. Just consider adding Netflix and Fiverr to yours.
