The world’s largest freelance marketplace platform Upwork. Inc. (NASDAQ: UPWK ) shares can’t seem to catch a break as they’re down (-52.6%) on the year. Despite the strong tailwind of the industry churning out nearly 500 million freelancers worldwide by 2030, stock sentiment continues to be negative. Pandemic-triggered lockdowns have been a boon to the Company as remote work has become a mainstream phenomenon that has been sticky even with reopening. Inflation and macroeconomic uncertainty are having an impact on growth in Europe. Enterprise Clients are the growth driver. The Company added 36 new enterprise clients including ServiceNow (NYSE: NOW), Asurion, Newsweek, Fanatics, and Pearson. Business revenue is growing at a 45% clip with $1 million clients growing significantly. The pandemic has ushered in a new normal for the workplace, which is now resilient and typically includes remote work. The lackluster stock price reaction may be more of a struggle of industry sentiment as shares of competitor Fiverr International (NYSE: FVRR ) (-70%) are down on the year. However, this could be a buying opportunity for investors who believe in the continued adoption and growth of freelancers and remote work moving forward as the tailwind gains more momentum.
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Features Recently Added to Upwork
The Company has added new features like Consultations to help onboard new clients by enabling paid booking sessions for expert advice from talent before taking on larger projects. A client using this new feature averages 1.5 days for a time-to-hire, which is half the time compared to using the Talent Marketplace. Nearly 50% of Consulting clients return for another job within 30 days, also a 50% higher rate than Talent Marketplace. The Company will extend Consolations across all 90-plus categories in the next quarter. Virtual Talent Bench (VTB) allows clients to share their talent list with both registered and unregistered users. Pricing changes have been made to allow Clients to access premium talent, talent sourcing and reporting tools from the ground up with Top Rate, Rising Talent, and Top Rated visibility Plus talent pool.
Upwork Improving the Basics
On July 27, 2022, Upwork released Q2 2022 results for the quarter ending June 2022. The Company reported a non-GAPP loss of (-$0.04) per share compared to consensus analyst estimates for a loss of (-$0.08) per share, a $0.04 beat. Revenues rose 26.3% year-over-year (YoY) to $156.9 million over consensus analyst estimates for $147.78 million.
Upwork Mixed Guidance
Upwork provided mixed guidance for Q3 2022 for EPS that came in between (-$0.15) to (-$0.17) vs. (-$0.16) consensus analyst estimates on revenues between $156 million to $158 million vs. at $150.84 million.
Upwork Price Levels
Using rifle charts on weekly and daily time frames provides an accurate view of price action for UPWK stock. The weekly rifle chart broke again at the $19.69 break Fibonacci level (fib).. The weekly downtrend has a falling 5-period moving average (MA) resistance at $17.31 followed by the 15-period MA at the $19.69 fib level. The weekly lower Bollinger Bands (BBs) is at $14.04. The weekly stochastic made a full oscillation that broke into the oversold 20-band. The daily rifle chart has broken down as well with an inverse pup breakdown as the 5-period MA resistance drops to $17.05 followed closely by the 15-period MA resistance at $17.19. The daily stochastic triggered an inverse pup breakdown on the crossover down to the 50-band. The daily lower BB is falling to $15.80. Attractive pullback levels are at $15.45 fib, $14.20 fib, $13.19 fib, $12.30 fib, and the $11.58 level.
The Appeal and Problem of Using Upwork
Upwork clients actually move their non-Upwork contractors to the platform to take advantage of global payroll and employment protection products that ensure compliance in 160 countries. Upwork’s platform addresses the needs for unified billing with improved visibility, reporting, and worker classification peace of mind. Upwork requires a high 20% fee for new talent jobs. That fee eventually drops after certain revenue milestones are achieved. For the client, the process of hiring talent on a project-by-project or hourly basis is simple. The client pays Upwork up front which is stored in an escrow account until the job is completed and then Upwork pays the talent. Upwork handles the monetary arrangements and ensures payment to the talent if they meet expectations. For international business, for the client or the talent, this can be a very valuable resource that justifies the high 20% commission. However, this may be a turn off for workers who believe the commissions are too high and seek to negotiate an agreement outside the platform. This is the last catch-22 that Upwork or any freelancer platform has yet to solve. Charge less to ensure talent retention or raise prices but risk losing clients.