Upwork:Position Changes

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2023 February 22

I increased the position by another 22.5% @11.80USD or approx. 1.56billion market cap for the following reasons

• I think Upwork is currently undervalued at approx. 2.2 times forward 2023 sales given its margin profile and growth outlook.
• I think it is plausible that Upwork can eventually profit from corporate cost cuts and a rebound after a possible recession see: Upwork:Quarterly_Results/2022_Q4
• The Upwork Earnings call hinted at a multitude of operating improvements and a restructuring towards a business unit structure with the goals to further accountability and independence which is the right step in my opinion.
• Upwork's take rate continues to be significantly lower compared to the competition from the likes of Fiverr. Therefore I expect some further growth of Upworks project catalog offering.
• Upwork could already achieve a considerably higher adjusted EBITDA with lower marketing spend. They have the flexibility to cut back spending in case of stronger-than-expected revenue headwinds.
• Fiverrs latest quarterly results and better-than-expected adjusted EBITDA projections draw attention to cost-cutting potentials for digital businesses like Upwork.

In case Upwork stock continues it's downward trend I plan to increase the position further at slightly above $10, approx. 8$ (?) and $6 price levels. While I think a retest of the $10 price level is not unlikely I don't think the likelihood of seeing a $6 price point is all too high. If we would see those price points though I am prepared to increase the position significantly.

2023 February 15

I increased the upwork position today by 28.5% @13.95 USD or a market cap of approx. 1.82billion for the following reasons:

• Upwork is venturing into a new field with EOR payroll contracts and is challenging the likes of Deel. Deel raised 300million at a 12 billion valuation while revenue is standing at 300million or half Upworks revenue. If the narrative flips that could prove to be a catalyst for the stock.
• The persistently strong u.s. labor market makes alternatives like an international and flexible workforce attractive.
• The amount of open jobs on Upwork are trending positively. See Upwork:Quarterly_Results/2022_Q4
• Upwork seems to be improving operationally. As an example i like their new enterprise client site or the fact that their changelog got more active.
• According to commentary in Q3 2023 new enterprise client sales have been slower than expected due to macro uncertainty, while clients have been holding of budgets. That could reverse at one point and provide an upside surprise to enterprise client sales numbers.
• Confirmation of over 2million freelancers on the platform.
• Stocks are overall still in rally mood.