Please ensure Javascript is enabled for purposes of website accessibility

Why Upwork Stock Fell 19.2% in March

By Steve Symington - Apr 9, 2019 at 6:11PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The freelancing platform slumped last month even after posting strong quarterly results.

What happened

Shares of Upwork (UPWK 10.03%) declined 19.2% in March, according to data from S&P Global Market Intelligence, despite strong quarterly results from the freelancing platform's recent IPO.

Upwork stock initially fell more than 10% on March 1 alone -- then settled to close down around 5%, the first trading day after Upwork's fourth-quarter report hit the wires. But that's not to say the report was bad; quarterly revenue climbed 23% to $67.3 million, translating to adjusted (non-GAAP) net income of $2.7 million, or $0.03 per share, swinging from a per-share loss of $0.27 in the same year-ago period.

Analysts, on average, were expecting an adjusted loss of $0.04 per share on lower revenue of $65.5 million.

Freelance writer working on a notebook computer

Image source: Getty Images.

So what

Upwork CEO Stephane Kasriel explained the company's relative strength, saying, "With macro-trends such as the skills shortages business are facing and the rise of remote work, plus our investments in product innovation, brand awareness, and sales infrastructure, we remain emboldened by our long-term opportunity."

To be sure, by the end of 2018, Upwork's number of core clients increased 22% year over year to more than 105,000, while client-spend retention increased 9 percentage points year over year to 108%. 

What's more, Upwork told investors to expect full-year 2019 revenue of $298 million to $304 million, the midpoint of which represents growth of 18.8% and stands slightly above analysts' expectations. That said -- and this could help explain its stock decline -- Upwork also anticipates first-quarter revenue of $68 million to $69 million, which was slightly below consensus estimates at the time for $70 million.

Now what

That "slow" start to 2019 notwithstanding, it likely didn't help that Upwork stock still stands around 30% above its $15-per-share IPO held just six months ago. But if the company makes a habit of underpromising and overdelivering as it did in the fourth quarter, and as it distances itself from its post-IPO volatility, I suspect the pullback could be short-lived.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Upwork Inc. Stock Quote
Upwork Inc.
$18.21 (10.03%) $1.66

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.