What: Shareholders in one-time market darling Freelancer Ltd (ASX: FLN) have watched the company's shares fall 9% today to an all-time low of 93 cents. The stock is now down over 40% since its ASX listing in November 2013, meaning that anyone who purchased Freelancer shares on-market is underwater.
So what: Given that there doesn't appear to have been any specific bad news to lead to the fall in share price the most likely explanation is that investors are re-assessing the high multiples that they are prepared to pay for technology stocks.
With a full year ending in December, the online employment search provider reported an operating profit of $1.1 million in February. When put in the context of a company with a market capitalisation of around $400 million, investors are paying for a lot of assumed future growth.
Now what: Investors who didn't get the opportunity to buy into the IPO at 50 cents per share might very well get the opportunity to buy at prices not too far off if the stock keeps falling. Like fellow online businesses SEEK Limited (ASX: SEK), REA Group Limited (ASX: REA) and Carsales.Com Ltd (ASX: CRZ), the potential of Freelancer is huge. If the company can ultimately monetise its customer base then the long-term returns from this stock could ultimately be substantial.
