Upwork (NASDAQ: UPWK) stock price surged in the extended hours after the company published encouraging financial results. The shares, which ended the week at $12.03 on Tuesday, surged by 20% after its earnings release. It hit a high of $14.45, the highest level since September.
Upwork business is doing wellUpwork is a leading company in the global talent acquisition and management industry. It operates one of the top platforms where people and companies list their projects and hire freelancers from around the world.
As a result, the company solves problems for both companies and freelancers. As firms look for ways to save money, they have turned to the platform, where they can find workers from low-wage countries.
The most recent financial results showed that the company’s business was doing well. Its total revenue rose by 11% to $175.7 million in the third quarter. Its marketplace revenue rose to $161.7 million while its enterprise remained flat at $26.1 million.
The company attributed its performance to the 2% increase in active customers, who reached 836k in the quarter. It also had to do with its pricing aspects as the company moved to a flat pricing.
Upwork also boosted its forward guidance. Its total revenue is expected to continue rising in the current quarter. It sees its revenue rising between $175 million and $180 million. This will bring the total annual revenue to between $680 million and $685 million.
Upwork faces numerous headwinds and tailwinds ahead. Its biggest headwind is the many users who operate out of its ecosystem, especially in the era of business networks like Slack and Microsoft Teams.
Upwork has not simplified this situation. By regularly increasing its commissions, Upwork forces many freelancers to opt for external payments. It is quite difficult to figure out how the company can solve this challenge.
The other tailwind is how higher the company can continue hiking fees. Earlier this year, Upwork announced that it was moving all freelancers to a 10% flat rate for all customers. This move benefited customers with 20% fee contracts but hurt those with a 5% fee.
It also has a client initiation fee of $4.75. The more it keeps jerking up prices, it will encourage more people to work outside of the platform.
On the positive side, Upwork has a strong competitive advantage in the industry. It competes with firms like Fiverr and Freelancer. It still maintains strong outlook in the industry.
Upwork stock price forecast
The daily chart reveals that the UPWK share price has crawled back in the past few days. This rebound is in line with the broader stock bounce back and the company’s strong earnings report.
Upwork share price has moved slightly above the 25-day and 50-day moving averages. Most importantly, it has formed an inverted head and shoulders (H&S) pattern, which is a positive sign.
Therefore, the outlook for the stock is bullish, with the next important resistance point to watch being the H&S neckline at about $15.
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