Why Upwork Stock has been hit hard this week


What happened

Actions of Upwork (NASDAQ: UPWK) sank 17.5% in the last week of trading, according to data from S&P Global Market Intelligence. Shares of the work-from-home market company were caught in a broader market pullback that particularly hit growth-dependent tech stocks.

UPWK given by YCharts

There doesn’t appear to have been much company-specific news behind Upwork’s sale last month, but concerns about faster-than-expected inflation have boosted sales in the market. the S&P 500 the index closed the week down around 1%, while the more Nasdaq Composite the index ended the period down 1.9%.

A dollar sign made of dollars.

Image source: Getty Images.

So what

Concerns about inflation have intensified this week, causing problems for Upwork stock. The Consumer Price Index (CPI) report was released on July 13 and showed that consumer prices rose 0.9% from May to June. It also showed that the June index numbers were up 5.4% year-over-year, the biggest rise in the CPI since August 2008.

Investors are worried that rising inflation could cause the Federal Reserve to raise interest rates, which would likely lead to a withdrawal of money from the stock market due to rising bond yields. It would also be more difficult for companies to finance growth initiatives with attractively priced debt.

Now what

The Upwork share price has seen volatile swings in 2021, but is still up over the year.

UPWK Chart

UPWK given by YCharts

The concert economy has grown significantly over the past decade and is likely to experience greater growth in the long run. Upwork’s job market and other services are showing strong growth, but investors should continue knowing that the stock remains at relatively high risk. The company currently has a market capitalization of around $ 6 billion and is valued at around 12 times expected sales this year.

In addition to the risks posed by inflation, rising interest rates and other macroeconomic changes, Upwork may also face new regulatory pressures. Some lawmakers at state and national levels have indicated that they want to impose stricter restrictions on working in the odd-job economy and push category jobs into the traditional employer-employee structure. While such changes could potentially hurt the value of Upwork’s platform, I still like the action as a high risk, high reward game and I own stocks in my portfolio.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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