3 Reasons Why You Should Consider Upwork (UPWK) For The Long Haul

Although an inherently risky investment because of its predominantly aspirational profile, market participants seeking a viable long-term opportunity should target freelancer networking platform Upwork (UPWK). Connecting enterprises seeking to fill short-term business needs with independent professionals, Upwork represents a direct player in the burgeoning gig economy. Recently, it posted a positive earnings result that attracted significant interest in the open and derivatives market.

According to Zacks Equity Research, Upwork came out with earnings per share of 4 cents for the fourth quarter of 2022, beating the consensus estimate calling for a loss of 3 cents per share. Further, the latest EPS print compares favorably to the loss of 5 cents a share in the year-ago quarter. These figures are adjusted for non-recurring items.

Notably, over the last four quarters, the company surpassed consensus EPS estimates four times.

On the revenue front, Upwork rang up $161.44 million on the top line, beating the consensus target by 1.34%. In Q4 2021, the freelancer platform posted sales of $136.86 million. As well, Upwork beat analysts’ estimates for revenue four times out of the last four quarters.

Not surprisingly, then, UPWK stock generated much attention in the options arena. For the Feb. 15 session, options volume hit 8,906 contracts against an open interest reading of 23,265. Further, call volume hit 7,507 contracts against put volume of only 1,399.

While the bullish swing undoubtedly centers on the latest earnings print, there are three other factors that should help make UPWK stock a buy for the long haul.

Rising Worker Discontent

In January of this year, Chicago-based staffing firm LaSalle Network came out with a startling report. According to its survey, 85% of U.S. workers are considering leaving their jobs in the next six months.

To be sure, this doesn’t mean that 85% of corporate employees are ready to bust out of their places of employment. However, should the right opportunity materialize, they would be more than willing to take it. Rising discontent drives worker frustrations, which might bode well for UPWK.

Per the survey, 39% of managers are dissatisfied with their roles, while 29% of rank-and-file employees feel the same. In other words, negative dynamics in the workplace don’t just impact the subordinates; those that make some of the most important decisions likewise struggle with purpose.

Because dissatisfaction levels cut across various skill and experience levels, Upwork may enjoy a potentially robust total addressable market. It’s not just that more people may join the gig economy. Rather, the quality of independent professionals may also rise as disengaged managers jump ship and branch out on their own.

The Facilitations of the New Normal

Easily one of the most impactful and conspicuous developments of the COVID-19 pandemic centered on changing expectations of the workforce. Once considered a privilege, remote operations represented a necessity for enterprises seeking to overcome the global health crisis. Of course, working from home carries with it several advantages, a predominant one being a lack of physical oversight.

Put another way, the most apathetic workers probably used the opportunity to slack off and get paid doing so. While such an accusation might sound rude and inappropriate, the reality is that even before COVID-19, American workers on average wasted more than two hours a day, translating to billions of dollars of lost productivity.

However, shrewd and astute workers probably recognized that at some point, the jig would be up. Therefore, these folks may have tested the waters of the gig economy, securing some side gigs and building a portfolio independent of what they do for their employer.

Should they decide to leave and do the gig economy full time, they already have a leg up in doing so – all while getting compensated by their former employers. Cynically, it’s a net positive for UPWK stock as the dynamic would theoretically expand the addressable market.

UPWK Benefits From Consistent Growth

As stated earlier, Upwork represents a growth machine, having beaten revenue expectations 100% of the time over the last four quarters. However, it also enjoys a performance on the top line that not many people may know about.

Specifically, since at least Q1 2018, Upwork has so far posted an unbroken chain of sequential quarter-to-quarter revenue growth. Over the last 20 comparisons, the average net gain against the prior quarter stands at $2.8 million. Fundamentally, this is a remarkable achievement because irrespective of massive frontpage headwinds – COVID-19, inflation, geopolitical flashpoints, mass layoffs – Upwork continued to chug along.

At some point, of course, the chain will be broken. But for now, this aspirational enterprise continues to expand its footprint meaningfully. Once the gig economy really gains momentum, UPWK stock can veritably soar. Certainly, it’s a name to keep on your radar.

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