Is Upwork (UPWK) Stock a Good Buy?

Upwork (UPWRK) stock looks like an attractive buy right now as shares trade around $6. The company IPOed at around $15 back in late 2018 and since then the stock continues to fall month after month.

As an Upwork user myself, I know the potential that lies in the world's largest freelancer marketplace. Upwork is a goldmine for hiring world class freelancing talent and should see a nice boost in activity due to the Coronavirus pandemic. Of course, work from home is becoming more commonplace and with an upcoming recession freelancing will undoubtly become a popular side hustle.

However, I don't like catching a fallng knife. The stock continues to drop so what is the positive signs for Upwork?

Higher Revenue for Upwork

Well, I'm thinking well into the future here. Upwork reported some impressive FY 2019 in their latest quarterly report. Check out some of these highlights:

  • Gross services volume (GSV) increased by 19% year-over-year to $2.087 billion
  • Revenue (under ASC 606) grew 19% to $300.6 million; Revenue (under ASC 605) grew 19% to $302.6 million
  • Marketplace revenue (under ASC 606) grew 20% to $268.3 million; Marketplace revenue (under ASC 605) grew 21% to $270.4 million

Over $2 billion on gross services revenue is pretty impressive. Users are spending a lot of money on the platform. Nice!

But what also impresses me is the $300 in annual revenue. That's 3/10th of the way to $1 billion. All of this took place before the COVID-19 forced the world into a global lockdown. If unemployment rates skyrocket, many small businesses will collapse and only the strongest companies will hire more employees.

Work From Home Becoming the New Norm

With no other employment options, Upwork should get a nice boost in traffic. I spent a few hours checking out the site and see no slowdown in jobs posted. Social distancing is the new trend and companies like Upwork benefit from a fragmented workforce. Freelancing can be a lonely job sometimes but it's a great option for people who faced a layoff or job loss.

In fact, The Observer mentions that up to 50% of the workforce in 2030 could be made up of freelancers. I expect Upwork to become a very popular company in the future. Digital noamds are already familiar with the company and it could become more mainstream.

Upwork Stock is Too Cheap

If you want to gamble on Upwork stock then now is a good opportunity. $6 is cheap. I'm buying shares now in anticipation of a fast growing gig economy.

Will I guess right? Who knows but Upwork is a strong buy for me.

DIsclosure: I own shares of Upwork (UPWK)

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