Most stocks have started to recover since the broad market bottomed out in late March after its coronavirus-fueled sell-off. Just a little more than 100 stocks hit new 52-week lows last week. However, some stocks have done a much better job of bouncing back than others.
As an online marketplace for freelancers and contractors, Upwork is a natural beneficiary of the new normal. It's giving disrupted businesses the ability to farm out white-collar gigs, and there are plenty of skilled specialists at home these days who are either out of work or have the spare bandwidth to take on side jobs.
The market didn't discriminate during the coronavirus correction, sending the stock all the way down to $5.14 on March 18. But since then, Upwork has clawed its way back to the low teens. It posted better-than-expected financial results last week, with revenue up 21% to $83.2 million in the first quarter. Back in February, it was only forecasting a top line in the $81.5 million to $82.5 million range. Gross services volume only rose 15%, but Upwork's ability to command a thicker slice of the action -- its take rate has risen from 12.6% to 13.6% over the past year -- is helping prop up revenue gains and widen its gross margin.
Upwork saw an initial slowdown in new clients in early March, and that is reflected in its weak guidance -- management expects revenue growth will slow to a 6% to 9% pace for the current quarter. Business picked back up by April, but that weakness at the tail end of the first quarter will weigh on the current quarter because it acquired fewer recurring revenue sources during that brief dry spell. Investors have forgiven the blip, and the stock hit a six-month high on Wednesday.
The most surprising name on this list is Uber. Social distancing, business shutdowns, and shelter-in-place orders have been rough on the transportation industry -- we just haven't needed to get around as much as we used to. That steep drop-off in local trips has tapped the brakes on the once-booming personal mobility market.
It's worse than you probably think, too, because ridesharing in its purest form -- the ability to score cheaper rides through the UberPool feature as drivers combine fares -- is no longer feasible. Social distancing means Uber and other ride-hailing services are limited to carrying just one party at a time.
Yet Uber surprised the market last week by posting stronger-than-expected revenue growth. Revenue rose 14% -- or 16% on a constant-currency basis -- with adjusted net revenue climbing 18% for the first three months of this year. The March slowdown in its flagship Rides segment was eased by a surge in demand for Uber Eats as folks are ordering more restaurant deliveries. Uber Eats isn't as profitable as the personal mobility platform that put the company on the map, but it's helping Uber and its drivers get through these challenging times. The stock price has more than doubled to above $31 since hitting a nadir below $14 a share on March 18.
With gyms and high-end spinning class centers closed across the country, it's easy to see why Peloton's business is booming these days. The maker of connected stationary bikes and treadmills is putting in quite the growth workout these days.
Revenue soared 66% to $524.6 million in its latest quarter, blasting through the finish line that analysts had laid out calling for a top-line burst of just 54%. Its hardware isn't cheap, but we've seen Peloton's connected fitness subscriber base skyrocket 94% over the past year. There are now 886,100 Peloton bike or treadmill owners on the premium subscription platform, and they're using the service more than ever, averaging a record 17.7 workouts a month. Churn is at a four-year low -- also not a surprise. In-home fitness is a no-brainer in this phase of the COVID-19 crisis.
Peloton went public at $29 in the fall, and tumbled to under $18 in mid-March. Since then, it has shot above $45, hitting new highs this week. Even the stock knows that volatility is good cardio.