News & Analysis

Downwork! 'Big tech' freelance platform Upwork experiences mass share sell-off as people keep their jobs

Andrew Saks, Thursday, 15 July 2021

The so-called 'big tech' community which dominates the entire world's social media and e-commerce sectors from its vast Silicon Valley base is usually an evergreen investment.

It is very rare that any form of instability occurs, and these publicly listed leviathans are often held out as reference points for the entire North American publicly listed stock range, however, yesterday was a different matter, and Upwork, the extremely popular freelance marketplace, was the subject of volatility.

The company's stock, listed on NASDAQ, closed yesterday down 17.38%, marking a major sell-off which some analysts have taken an extreme view on by assuming that investors have begun to adapt their view on the company en masse.

There is absolutely no reason from a corporate perspective why the massive upward trend that began a few weeks ago and has continued to cause Upwork's shares to rise has suddenly been interrupted so abruptly and why such a massive drop occurred yesterday, and there is absolutely no adverse news.

On the contrary, the 72% run-up from May's low to Tuesday's close was largely set in motion by the company's first-quarter revenue that topped expectations.

Upwork rather cleverly disclosed in March this year, just before its shares started to rise rapidly in price, that it expects up to 25% of professionals expect to permanently work remotely in future, therefore backing up the shift away from traditional employment toward freelance jobs in certain areas such as web design, the creative and digital marketing sectors and other online services often found on 'gig' websites such as Upwork.

This milked the mood of post-lockdown anti-commuters and created a lot of interest in Upwork's stock as the assumption would have been that many professionals would go freelance and turn to Upwork to promote their services rather than traditional contractor agencies, largely because freelancing can be a quick turnaround for being paid and many projects can be worked on at once.

All of this, plus the clear reluctance of some of the most highly paid employees for large firms to return to the office even when instructed to do so by their CEO which was demonstrated by the open letter written by 80 Apple staff to CEO Tim Cook following his company-wide instruction to return to the office.

In the beginning of June, about 80 employees of Apple voiced their displeasure in being told to return to work, stating, “We feel like the current policy is not sufficient in addressing many of our needs.” The letter pointed out that workers delivered “the same quality of products and services that Apple is known for, all while working almost completely remotely.”

This occurred during the period of rising share prices for Upwork, as investors considered the changed mindset of many employees in sectors in which Upwork usually acts as an agency for freelancers.

Many of these employees appear to want to have a work-life balance and have begun to voice their opinion that a two-hour, round-trip commute becomes debilitating over time, which is odd considering that in the past, it was always considered a person's choice if they chose to live far from their workplace and is not the employer's responsibility.

Perhaps a month later, as that has died down and people are making the commute, realizing that they should not bite the hand that feeds them - oil usage figure show that far more commuting in the US and Europe is now taking place than it did two months ago - and therefore there has not been such a rebellion in which well paid employees with gold-plated employment contracts and massive benefits decide to cut their nose off to spite their face and go freelance.

As a famous sports team manager once said when an extremely highly paid member of the professional sports team shouted at him "What is my motivation for being here?!".

"Your salary" was the response, which put an end to such arrogance on the spot.

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