Why the share price of Freelancer Ltd jumped today

In afternoon trade one of the best performers on the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) has been tech company Freelancer Ltd (ASX: FLN). Its shares are up 5% to $1.05 after announcing the acquisition of two rival online freelancing companies.

The world’s largest freelance and crowdsourcing marketplace by total number of users and job listings just got a little bit bigger with the addition of Nubelo and Prolancer.

After Freelancer, the two companies represent the largest Spanish and Portuguese-language marketplaces respectively. Management believes the deals will cement the company’s position as the dominant force in the Latin American, Spanish and Portuguese markets.

Freelancer’s CEO Matt Barrie had this to say on the acquisitions:

“This acquisition reinforces our global presence and international expansion, consolidating our platform as the leader not only in the English language, but now also in all Spanish and Portuguese speaking countries. We welcome all of Nubelo’s and Prolancer’s users to our community where they will find over 8,000 new jobs per day, and the ability to work with our talented worldwide community of 22 million users.”

As no commercial terms were provided, it is difficult to judge exactly whether the deal is a good one at this point. But I trust the experienced Mr Barrie to have not overpaid.

Overall, I’m bullish on Freelancer’s future and believe it has a good chance of replicating the success of SEEK Limited (ASX: SEK).

The value it brings users of its platform is clear. The company estimates that a typical $2,000 contract job for a small business could cost as little as $200 through Freelancer’s network. It’s hard to argue against savings like that.

I would class Freelancer’s shares as being at a good entry price for a long-term buy and hold investment.

The only problem with Freelancer is that at this stage it doesn't pay a dividend. In the future I expect it will do so, but until then this hot dividend stock is where you can find a HUGE yield.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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