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The Gig Economy Stock Riding an AI Wave to Record Results |
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Upwork Inc. | | 04 July – Pre‑market
Ticker: UPWK | Sector: Internet Content & Information | Market Cap: ~ $1.79B |
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30‑Second Take |
Why now? Upwork revealed record profit and revenue results in its Q1 earnings report (released May 5). |
Net income doubled to $37.7 million year-on-year, with $56.0 million in adjusted EBITDA and a new high of 29% adjusted EBITDA margin. |
Revenue was also at a record high, topping $192.7 million, the equivalent of a 1% year-on-year growth with record gross margins of 78.3%. |
The platform is now heavily pivoting into AI and has set itself apart as the number 1 destination for A1 talent and job openings. |
AI is the core component of a three-pronged growth plan, with new Enterprise products for larger companies and additional ads and monetization plans set to power the platform to even stronger results in 2026 and beyond. |
UPWK stock is good value right now and could be a smart addition to a longer-term portfolio for investors seeking triple-threat investments. |
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Trade Setup |
Time frame: Swing to medium-term
Edge type: Momentum breakout |
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Snapshot Table |
Metric | Value | Current Stance |
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Price | $13.64 | Below average |
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52‑week range | $8.43 - $18.14 | Below average |
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Short interest | 8.84% | Below average |
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Next catalyst | Q2 earnings, expected early August | |
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Chart |
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5-Day Synopsis: Trading has been bumpy throughout the last five sessions, with ongoing peaks and troughs seeing UPWK trade above $14.00 before sliding back to current levels. |
This activity has been driven by various forces, including new institutional positions - Robeco Institutional Asset Management confirmed the addition of 142,073 UPWK shares on July 2. |
Helping to power the upswing, Upwork also confirmed some board changers earlier in the week and the creation of a new Advisory Council. |
We're also seeing an element of technical consolidation around support and resistance zones following May's strong earnings release. |
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Bull Case |
Core thesis: Headquartered in the tech heartland of Palo Alto, California, Upwork was created with a mission to transform how the world works. |
It connects independent freelancers with businesses seeking remote talent across more than 10,000 skill sets. |
Founded in 2013 and formerly known as Elance-oDesk, Upwork's platform has so far generated more than $25 billion in economic opportunity for talented gig workers around the world. |
It's the largest platform of its kind, and connected more than 830,000 businesses with independent workers in more than 180 countries in 2024. |
Catalysts: Upwork has embraced the introduction of AI with the creation of multiple AI tools, including its own AI tool, Uma, Mindful AI™. |
Uma helps businesses identify the best talent matches (around 70% of Upwork businesses used it to create job ads in 2024), and provides tools to help freelancers craft stronger proposals. |
In the future, Uma will power entire work outcomes. |
Becoming a leader in AI is a savvy move for Upwork, given many industries lack AI capability and expertise. By stepping into that space, it's positioned for strong growth. |
Over 64 million Americans – the equivalent of 38% of the workforce – freelanced in 2024 according to Upwork figures. |
With that number growing year-on-year, and more cost-conscious businesses looking to plug talent gaps and access needed skills without the pressures of payroll, Upwork is on track to continue its recent run of form. |
Valuation upside: Analysts see UPWK stock reaching a high of $25.00. The lowest estimates fall at $15.00 exactly, with an average price target of $19.10. |
Technical tailwind: Strategic AI and board updates are offering positive tailwinds, with technical indicators pointing to support around $13.44 and resistance near $14.57. |
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Bear Case |
Key risk: While Upwork was founded on a vision to change how people work and give them back control of their 9-to-5, AI could single handedly render that mission obsolete. |
AI tools like ChatGPT are increasingly capable of automating tasks previously done by freelancers—especially in areas such as writing and translation. |
If clients choose to use AI rather than pay for Upwork's services, Upwork's Gross Services Volume (GSV) and revenue growth could slow. |
It's also worth noting that while revenue has grown, profitability remains a challenge, especially with Upwork's ongoing and growing investment in AI, compliance, and platform safety tools. |
Macro/sector headwinds: Regulatory and compliance issues are an ongoing headwind for platforms like Upwork, with many nations seeking to reclassify freelancer or gig economy workers as employees. |
Any changes in labor laws to amend freelancer classification or global taxation rules could increase compliance costs or reduce the appeal of gig economy platforms. |
Competitive threat: Upwork isn't the only gig economy platform for freelancers. |
FIVERR is a serious competitive threat, and it too is exploring how it can use AI tools to make its offering more attractive to enterprise clients. |
If they prove to be more innovative, or better meet the needs of businesses and freelancers, Upwork's customer base could quickly switch allegiance. |
Crowded-trade concern: With rising competition and AI disruption threatening long-term relevance, even modest user churn figures or margin pressure could trigger sharp selloffs. |
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Quick Checklist |
✅ Thesis still valid after today's close
✅ Volume confirms move above key levels
✅ Catalyst date double-checked (July 03, 2025)
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Deep‑Dive Links |
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That's all for today's Everyday Alpha. We'll have a new pick for you every morning before the market opens, so stay tuned! |
Best Regards,
—Noah Zelvis
Everyday Alpha |
