No surprise in the headline here. UPWK , just like FVRR , has had one hell of a run. COVID has shown us that freelance work is cheap and effective, and that this is the future as digitization and globalization improve. Congratulations to everyone who has been in either of these stocks since the beginning.
PRO: Both UPWK and FVRR have 'modest' market caps at 5.5 and 7.8 billion... which is significantly higher than a year ago. These are but a fraction of the potential freelance industry (IMO) and will return to these levels and higher in the LT .
CON: UPWK has the safer business strategy IMO, with their focus serving business contracts. Comparably, FVRR serves mostly consumer level contracts. They are each starting to get into each others' spaces. I don't love the business model of either: mostly, they each take a cut of the job, but nothing is stopping someone from paying a freelancer directly and cutting out these companies as the middlemen. I trust they'll figure it out eventually.
WHERE TO BUY:
- I'm waiting for weekly (if not monthly) consolidation, the nearest points to look for a bounce being at roughly $33 and $30 (representing 25% and 31% downside respectively). This would be my first look at buying.
- After the above, UPWK IPO'd at $23/share. I think this is a reasonable scouting point for a LT entry, particularly considering revenue has gone from $153 to $373 since then (FY 2018 to 2020), 2.4x. If we're valuing this unprofitable growth stock based on future value and revenue growth, then this value would be a huge discount! The implied stock price based on this revenue multiple would be $56/share (2.4*$23), slightly below where we topped out.
- Weekly RSI is below 70 for the first time since October. Let's wait for <40.
- Weekly MACD is screaming "LOOK OUT BELOW". Let's wait for a sign that weekly consolidation is losing momentum.
PRO: Both UPWK and FVRR have 'modest' market caps at 5.5 and 7.8 billion... which is significantly higher than a year ago. These are but a fraction of the potential freelance industry (IMO) and will return to these levels and higher in the LT .
CON: UPWK has the safer business strategy IMO, with their focus serving business contracts. Comparably, FVRR serves mostly consumer level contracts. They are each starting to get into each others' spaces. I don't love the business model of either: mostly, they each take a cut of the job, but nothing is stopping someone from paying a freelancer directly and cutting out these companies as the middlemen. I trust they'll figure it out eventually.
WHERE TO BUY:
- I'm waiting for weekly (if not monthly) consolidation, the nearest points to look for a bounce being at roughly $33 and $30 (representing 25% and 31% downside respectively). This would be my first look at buying.
- After the above, UPWK IPO'd at $23/share. I think this is a reasonable scouting point for a LT entry, particularly considering revenue has gone from $153 to $373 since then (FY 2018 to 2020), 2.4x. If we're valuing this unprofitable growth stock based on future value and revenue growth, then this value would be a huge discount! The implied stock price based on this revenue multiple would be $56/share (2.4*$23), slightly below where we topped out.
- Weekly RSI is below 70 for the first time since October. Let's wait for <40.
- Weekly MACD is screaming "LOOK OUT BELOW". Let's wait for a sign that weekly consolidation is losing momentum.
Outside of the 24 Feb anomaly (profit taking after earnings), we have been forming a steady wedge of daily consolidation. This to me is really healthy and will help the stock cool off.
It's hard to say what direction the wedge will break, but I expect these 2020 high-flyers to continue seeing daily and weekly consolidation until their fundamentals are in-line (net margins are squeaking towards positivity, and P/S is 'only' ~14 right now--which is not too bad for a growth stock).
While I truly love the company and the stock, I am really practicing my patience here and might even get greedy with a limit order around $35 (just above the $34.51 0.5 Fib level from the all-time-low to the all-time-high).
Happy trading everyone!