Is Upwork a buy?

Updated: Dec 18, 2020

It’s time to talk about another online service name. Here is the breakdown on $UPWK, otherwise known as Upwork.


Current Price: $37.18

52/Wk High: $38.60

52/Wk Low: $5.14


Market Cap: $4.5 Billion


Read below for the breakdown!


Upwork is an online employment marketplace in which enables businesses to connect with and hire freelancers with talent.


Given the pandemic, remote work has been in demand, therefore, benefiting the Upwork platform.


Not only has the company itself seen a boost from the pandemic but the stock itself has as well with $UPWK going on a massive 250% run throughout 2020.


Digging into the numbers Upwork beat Q3 expectations with an EPS of $-0.02 versus the EPS analysts consensus estimate of $-0.08. The company also saw plenty of growth under the hood.


Upwork went on to report that revenue grew 24% year over year to $96.7 million throughout the third quarter. Management also reported that marketplace revenues increased by 26% throughout Q3 to $88.0 million.


Furthermore, the company reported that the GSV (gross services volume) increased by a whopping 23% year over year to $654.5 million.


Rounding out the Q3 report Upwork reported that the marketplace take rate increased to 13.6% from 13.3% the same time last year. Lastly, gross margin increased to 73%, an increase of 2% year over year.


It is also important to note that Upwork’s revenues have been consistently increasing every quarter for the last nine quarters, creating a consistent trend in one factor pertaining to the company’s growth.


Shifting into the balance sheet the numbers are solid.


Total Debt: $13 million


Total Liabilities: $220 million


Total Assets: $502 million


Cash & Short Term Inv: $155 million


While the balance sheet and earnings numbers are solid and improving, the valuation is relatively expensive.


Price to Sales: 13.33x


Price to Book: 16.34x


When it comes to management Upwork leadership has been effective but could see improvement.


Return on Equity: -11.35%


Return on Assets: -6.63%


Return on Invested Capital: -10.35%


Given the numbers, the analysts remain bearish on Upwork with a mean price target of $31.80/share, representing a -14.75% downside.


It is also important to note that the high price target is $44.00/share, representing a 17.96% gain, while the low price target is $27.00/share, representing a -27.61% downside.


On a technical basis, Upwork is relatively bullish. According to the six-month charts, the MACD is turning back to the upside within a tight range around 2.44.


The six-month charts are also indicating an RSI of 68.04 and CCI of 148.82, both of which are on the high end. On a final technical note, the stock trades roughly a point off its highs.


In short, Upwork seems to be a solid long term investment given the consistent revenue growth, increasing work from home trend, and digital trends going into the next few years.


EAT - SLEEP - PROFIT


Disclaimer: This is not direct financial advice, simply an opinion based on independent research.