What happened

Shares of freelancer referral site Upwork (UPWK -0.18%) stock dropped more than 10% in early trading Thursday. The stock remains down 10.2% as of 1:15 p.m. EDT, although it apparently "beat earnings" for the fiscal first quarter of 2019.

Analysts were expecting Upwork to report a $0.05-per-share loss for the quarter on revenue of $68.9 million. As it turned out, Upwork met that sales estimate, and lost "only" $0.04 per share -- an "earnings beat."

Cartoon professor explaining a stock chart

Image source: Getty Images.

So what

So why are the shares down anyway? Great question.

First-quarter revenue grew the expected 16% year over year. And Upwork's $0.04 GAAP loss, while not exactly good news, was only 20% of the $0.20-per-share loss it incurred in last year's Q1.

Now what

Probably what we're seeing here is a reaction not to Upwork's earnings but to its guidance. Upwork's promise to book about $73 million in sales in Q2 falls a bit short of the $74 million sales estimate Wall Street had been giving.

Similarly, Upwork thinks it will grow sales to between $299 million and $304 million by the end of this year. That's $301.5 million at the midpoint, and suggests a sales miss for the year, as well. (Wall Street is looking for more than $302 million in sales.)

So investors may be selling Upwork shares on worries that the company might miss sales estimates by $1 million or less this year. Given the earnings beat and still-growing sales we saw in Q1, though, that might be overreacting just a bit.