Its late-night over here, and I am trying hard to starve myself from junk food this entire month. I connected earlier with an old friend of mine, and we had a great chat around the future of employment, and we may not realize it, but as soon as 5G kicks in, we may all be living and embracing the digital nomad life. It was only a few years back when Digital Nomad life became a thing, evidenced by the increase of travelers in Southeast Asia countries. With COVID, now everyone is working remotely. Isn’t that the foundation of the digital nomad? We may not be able to travel internationally due to travel restrictions, but one can always get an Airbnb in a different neighborhood, residence, apartment, or whatever suits them. It is only a matter of time when the borders will be open. I think the industry will adapt and implement preventive measures for international travel.
I have been looking around for the next company with a potential upside in the next 2-5 years, and I stumbled across UPWORK. Upwork is an online platform to hire individuals for any task in any country. Upwork opens up employment opportunities for struggling countries. With technology advancement and 5G approaching, it will be easier for these digital nomads or freelancers to connect with businesses worldwide to perform tasks through the Upwork platform. The future of work is already changing as a result of COVID. More and more employees are working remotely, and the metrics are evolving from employee headcount to task-driven. In this environment, employers are keen to complete tasks rather than training employees from scratch. The working environment is shifting to a decentralized model, a model that is cost-effective to companies. Malaysia is already a shared services hub for big MNCs. The rise of this platform will just further decentralize the entire model. I like the idea, and I think this company is taking two steps ahead in promoting the right employment opportunities; however, I do recognize that some struggling countries do not have the infrastructure to even connect to the internet.
Upwork sales grew 19% in Q2, and the company’s latest guidance implies a further 14% rise in revenue in Q3. CEO Hayden Brown says the company capitalizes on “the global shift toward remote work and the widespread need for flexible talent solutions, welcoming a surge of new customers,” and holding the line on prices, with gross margins steady at 71%. Nevertheless, the fact remains that Upwork lost money in Q2, and until Upwork finds a way to earn a profit on that revenue, it will remain a risky stock to own. Upwork’s CEO made a point during the recent earnings call that he expects to see Upwork report ‘sustained revenue growth of 20% or more in the years to come’. I can say the environment we are living in is in favor of the company’s business model.
Today (August), Upwork is trading at $14 with a market cap of $1.7b. The share price was trading at $5 during the short blip in March 2020. I am not a financial advisor, and I am not recommending anyone to buy this stock. I like to find new companies that disrupt the existing system and provide equality and fairness to the mass. I love the business model, and the stock price is attractive. With steady revenue growth, the company should be profitable in subsequent years. I hope to be one of those digital nomads utilizing the Upwork platform, traveling the world enjoying a cup of coffee from the mountains or by the beach and working from anywhere in the world.