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Upwork UPWK shares have appreciated 17.3% year to date (YTD), underperforming the broader Zacks Computer and Technology sector’s appreciation of 30.7%.
UPWK shares have also lagged the Zacks Internet - Services industry and peers, including Tencent TCEHY, Marchex MCHX and Shopify SHOP.
Over the same timeframe, shares of TCEHY, MCHX and SHOP have returned 35.7%, 38.2% and 45.6%, respectively. The industry has appreciated 22% YTD.
Upwork’s underperformance can be attributed to sluggish top-of-funnel indicators like the number of clients seeking work and Gross Service Volume (GSV) per active client. During the third quarter of fiscal 2024, GSV declined 3.1% year over year to $998 million. Persisting inflation and high interest rates have negatively impacted UPWK’s prospects.
Upwork Inc. Price and Consensus
Upwork Inc. price-consensus-chart | Upwork Inc. Quote
However, a switch in the staffing process of businesses to cost-effective and high quality and development in offline, digital and analog recruitment have driven UPWK’s prospects. UPWK’s AI innovation, as well as strengthening Marketplace and Managed Services offerings, bodes well for investors.
Upwork’s Expanding AI-Integrated Portfolio Drives Prospects
UPWK recently enhanced Uma’s, an AI-integrated offering that assists users in automating their tasks, capabilities to improve customer experience and increase client momentum.
Uma’s capabilities include enabling professionals to create customized proposal drafts for freelancers and efficiently evaluate candidates for users based on requirements.
UPWK launched Uma Integrated Managed Services to scope projects, analyze skill sets and formulate teams of professionals to produce outcomes.
The company’s acquisition of Headroom is a tailwind to the topline as Headroom’s integration aids in driving UMA’s AI advancement and development.
Further, Upwork announced the acquisition of Objective AI, Inc., to refine and enhance Upwork’s core search and drive multi-modal capabilities for Uma to provide users with images, audio and video content.
Upwork’s Work Innovator Research Assistant, built on the GPT-4o-mini model, is a solution to synergize technology with human knowledge by collaborating with Hourglass Collaborative to enhance user experience.
Further, Upwork’s expanding clientele is expected to drive prospects by boosting market reach. UPWK’s implementation of automated solutions, including third-party vendors, across the business aids prospects as it aids the company in streamlining operations and focusing on a narrow portfolio with high ROI investments.
UPWK partnered with Lettuce, Builderall, Ocoya and TheWordssmith, some emerging tech providers, to provide fully managed projects to users. These projects will be embedded within the customer experience of partners, leading to expanded access to UPWK’s offerings beyond its core platform.