Freelancer Ltd lifts 8% on latest acquisition: Is it a bargain?

Shares of outsourcing and freelancing marketplace, Freelancer Ltd (ASX:FLN), have jumped 7% on the acquisition of California-based e-commerce business, Escrow.com.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of freelancing and outsourcing marketplace, Freelancer Ltd (ASX: FLN), today soared at much as 8.5% before settling to trade 6% higher following the $430 million company's decision to buy California-based e-commerce business, Escrow.com.

In an announcement to the ASX, Freelancer said it would acquire the secure online payment business for $US7.5 million in cash, with a $10 million institutional placement already being completed at a price of $0.995 per share – a discount to the last traded price of $1.

Escrow.com provides licensed and regulated online secure transactions between buyers and sellers by acting as a third party. Founded in 1999 by Fortune 500 company, Fidelity National Financial, Escrow.com is partnered with reputable names such as eBay, GoDaddy, Autotrader.com and Flippa.com.

During financial year 2014, Escrow.com had net revenue of $US5 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $US1.2 million, with over $US2.2 billion in transactions performed to date.

However, this deal is also one of strategic importance to Freelancer.

Escrow.com will be able to reduce the financial risk involved when Freelancer matches customers with freelancers from around the globe.

Freelancer's CEO and 44.7% shareholder, Matt Barrie, said: "We are pleased to acquire Escrow.com, the world's largest online escrow company."

"This highly complementary acquisition will enhance the ability of our 15 million users to transact securely, and there are large opportunities for growth and synergies with core offerings," Mr Barrie said. "Finally, it is a strong cornerstone for entering the payments space."

Should you buy Freelancer shares?

Based on total users and projects posted, Freelancer is the world's largest freelancing and crowdsourcing marketplace. After a well publicised initial public offering in late 2013, shares of Freelancer have fallen from their peak of $1.69 to trade at around $1.05 today.

After its recent quarter was cash flow positive, it is arguable that now could prove to be the best buying opportunity for investors bullish on the company.

However, it is important to remember it is still a speculative company. While, there are tremendous opportunities for Freelancer to make its own online marketplace (similar to fellow ASX-listed technology company XERO FPO NZ (ASX: XRO)) it remains to be seen just how profitable it can become.

Motley Fool contributor Owen Raskiewicz owns shares of Xero. Owen welcomes your feedback on Google plus (see below) or you can follow him on Twitter @ASXinvest. The Motley Fool Australia owns shares of Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »