Upwork Inc. (UPWK): A Bull Case Theory

We came across a bullish thesis on Upwork Inc. on Invest in Quality’s Substack by Invest In Assets. In this article, we will summarize the bulls’ thesis on UPWK. Upwork Inc.'s share was trading at $13.58 as of August 7^th. UPWK’s trailing and forward P/E were 7.90 and 11.51 respectively according to Yahoo Finance.

Upwork Inc. (UPWK), a leading freelancing platform, is positioned to benefit from the structural expansion of the gig economy by simplifying hiring, project management, and payments for businesses and freelancers. The company’s strong gross margin of 77.29% highlights the scalability of its model, and it reported 14.54% year-over-year revenue growth. Trading at modest valuations—2.7x EV/Sales and 11.6x EV/EBITDA on a next-twelve-month basis—Upwork’s improving financial profile presents an appealing entry point.

In Q3, the company delivered record net income and a 193% increase in free cash flow, reaching $0.55 per share over the last twelve months. This FCF strength was partly due to a favorable billing schedule and cost-cutting measures from a prior workforce reduction, which are now bearing fruit. Upwork has also launched a new Business Plus membership offering to boost recurring revenues by encouraging more consistent client spending, further reinforcing the platform’s stickiness and monetization potential.

These initiatives support long-term margin expansion and underscore a broader shift toward a more efficient cost base. Despite its growth, Upwork remains undervalued relative to its improving profitability and robust market positioning. With a clean balance sheet, operating leverage, and continued traction in enterprise and SMB adoption, the stock offers compelling upside. Investors are presented with an opportunity to participate in a digital labor platform that combines improving fundamentals, disciplined execution, and exposure to a secular labor transformation. At current levels, UPWK offers an attractive risk/reward profile, with meaningful catalysts that could drive a rerating of the stock.

Previously we covered a bullish thesis on Upwork Inc. by Oliver | MMMT Wealth in December 2024, which highlighted strong gross margins, free cash flow growth, and platform scalability. The company’s stock price has depreciated approximately by 29% since our coverage. This is because the thesis has not yet played out. The thesis still stands as fundamentals remain intact. Invest In Assets shares a similar view but emphasizes deeper undervaluation.

Upwork Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held UPWK at the end of the first quarter which was 28 in the previous quarter. While we acknowledge the potential of UPWK as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.