2 companies both have big promises, as an investor you could make a lot money out of it, But which one is the best company to put your money in?!
00:00 Fiverr & Upwork
If you’re an investor, and you’ve got 10,000 dollars laying around, you’ve done all your research for stocks investing, and the last dilemma you have is you have to choose between Fiverr and Upwork. Which ‘gig economy’ stock has more room to run faster this year?
00:34 Let go back
If you’re not into these two platforms, we have to back track slightly. Because Over a third of American workers are now part of the “gig economy,” which comprises freelance and independent contractor jobs. That percentage could continue climbing as fresh employment opportunities emerge on online platforms like Fiverr. And the other end, we have Upwork, which is the fusion of two older platforms (Elance and oDesk) six years ago, their job is to connect companies to freelancers. So how do compare these companies to one another?
02:10 So, How do they make money?
Fiverr generates most of its revenue from transaction fees and service fees. Its take rate, or the percentage of each transaction it retains as revenue, rose from 26.7% in 2019 to 27.1% in 2020. Its platform offers over 500 categories of gigs, including design, marketing, and writing tasks. Upwork generates most of its revenue from service fees for freelancers, which include transaction fees for payments and sales of virtual tokens for bidding on marketplace jobs. It also charges its enterprise clients fees for subscriptions and payroll services.
03:39 Which platform is growing faster?
The pandemic generated tailwinds for both Fiverr and Upwork as people relied more on remote work and freelance opportunities. Fiverr’s revenue rose 77% to $189.5 million in 2020. It ended the fourth quarter with 3.4 million active buyers, up 45% year-over-year, as its average spending per buyer rose 20% to $205 dollars. Upwork’s revenue rose 24% to $373.6 million in 2020. Its gross services volume, which measures the total amount spent by its clients and users, increased 21% to $2.5 billion dollars. Those growth rates are impressive, but both companies are unprofitable by GAAP measures.
05:30 Rosy expectations
Fiverr expects its revenue to rise 46-50% in 2021, and for its adjusted gross income to grow 98% up to 131%. Wall Street expects its revenue and earnings to grow 52% and 31%, respectively, this year. Upwork expects its revenue to increase 23% up to 26% in 2021, and it reiterated its goal of generating more than 20% revenue growth over the long term. Analysts expect its revenue to rise 25% this year.
06:38 So? Which one is better?
Now, it seems we’re all good on both stocks, but there is an edge to this story. Fiverr trades at over 190 times forward earnings and nearly 30 times this year’s sales. Those high valuations could limit its upside potential, especially as higher bond yields spark a rotation from growth stocks to value stocks. Upwork looks cheaper at 12 times this year’s sales, but it’s still pricier than other tech stocks that generate comparable growth rates. Now, when we have compared these two stocks with one another you’ll notice that Fiverr’s growth rates are impressive, But they always say there is a good time to buy certain stocks, and a good time to sell certain stocks. and I believe fiverr currently has the wrong price for the right company in this volatile market.