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5. Upwork Inc. (NASDAQ: UPWK)
Number of Hedge Fund Holders: 34
With freelancers adding $1.2 trillion to the U.S. economy and 36% of the total workforce in the country doing freelance work, online jobs platform Upwork is bound to thrive as the company remains a market leader in a growing industry.
Analysts believe that the freelancing trend will continue to rise as companies find it more cost effective and results-oriented. Upwork posted an upbeat fourth quarter after which several analysts boosted their price targets for UPWK stock. Stifel increased its price target for the stock from $40 $60, while MKM Partners hiked its price target from $52 to $69.
As of the end of the fourth quarter, 34 hedge funds in Insider Monkey’s database of 887 funds held stakes in Upwork, compared to 27 funds in the third quarter. Ancient Art (Teton Capital) is the biggest stakeholder in the company, with 3.3 million shares, worth $115.3 million.
Spree Capital Advisers in their Q4 2020 Investor Letter said that they were able to maintain a bullish insight for Upwork Inc. (NASDAQ: UPWK), and so they increased their position in the company. Here is what Spree Capital Advisers has to say about Upwork Inc. in their Investor Letter:
“Early in the fourth quarter we meaningfully increased our position size in Upwork (UPWK). Upwork is a global employment marketplace that enables businesses to vet, hire, and manage talent as part of their distributed workforce. Upwork facilitates labor and demand side connectivity on a global scale by providing the infrastructure to create trust and to streamline talent sourcing, contracting, analysis and payment. Freelancers benefit from having a reputation ranking system that feeds their marketing channels, allowing them to have access to quality, flexible work and on time compensation. Businesses on the demand side benefit by having extensive access to specialized talent, enabling faster and more cost effective hiring, and by having the strategic optionality inherent in the ability to flex a portion of their workforce based on changing demand requirements.
Labor markets have long had unnecessary frictional inefficiencies driven by regional talent imbalances and long-term trends of increased specialization of labor and declining labor mobility. Meanwhile, innovations in communication and global connectivity have transformed the way work gets done. Knowledge workers seek the flexibility and geographic advantages of on demand work, but the barrier to adoption has historically been established habits and work standards on the demand side. The Covid-19 global pandemic has broken down those barriers. We see three steps in the path to enterprise usage and shareholder value creation.
First, Upwork is reducing frictional barriers to on demand labor adoption on the demand side by modularizing the most common jobs served on the platform. Project Catalog is a collection of predefined projects that businesses purchase through an e-commerce purchase experience. Users on the demand side benefit from a frictionless way to purchase well defined, quality verified tasks to augment more complex work being done by full time employees. On demand workers on the supply side benefit from having a new avenue to market and sell the services they consistently perform. Importantly, Project Catalog widens the customer acquisition funnel by providing an easy on ramp for new customers to source and connect with talent, enabling businesses to quickly start with small projects and scale to larger and longer-term projects and relationships.
Second, Upwork is shifting its go to market strategy to target large enterprises. Currently, enterprise customers with more than 100 employees account for 20% of Upwork’s $2.7 billion in gross services volume. As part of shifting the go to market strategy, small and medium sized business customers will move to a fully self-service offering, allowing Upwork’s sales force to focus on capturing the $3.5 trillion in gross services volume that large enterprise customers currently spend on contingent labor. As Upwork’s sales team targets the large underserved market opportunity presented by enterprise customers and raises awareness of the quality verified modular work units available in Project Catalogue, there is a long runway for Upwork to power offline to online conversion in the on demand labor marketplace while breaking down the barriers to adoption and growing the overall size of the market.
