Yahoo Finance Amidst increasing losses, Investors bid up Upwork (NASDAQ:UPWK) 3.9% this past week
Investing in stocks comes with the risk that the share price will fall. Anyone who held Upwork Inc. (NASDAQ:UPWK) over the last year knows what a loser feels like. The share price has slid 62% in that time. The silver lining (for longer term investors) is that the stock is still 25% higher than it was three years ago.
Although the past week has been more reassuring for shareholders, they're still in the red over the last year, so let's see if the underlying business has been responsible for the decline.
Check out our latest analysis for Upwork
Upwork wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Upwork grew its revenue by 31% over the last year. We think that is pretty nice growth. Unfortunately it seems investors wanted more, because the share price is down 62% in that time. It is of course possible that the business will still deliver strong growth, it will just take longer than expected to do it. For us it's important to consider when you think a company will become profitable, if you're basing your valuation on revenue.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. So it makes a lot of sense to check out what analysts think Upwork will earn in the future (free profit forecasts).
A Different Perspective
Upwork shareholders are down 62% for the year, falling short of the market return. Meanwhile, the broader market slid about 10%, likely weighing on the stock. Fortunately the longer term story is brighter, with total returns averaging about 8% per year over three years. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Upwork , and understanding them should be part of your investment process.
Upwork is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
