3 Stocks to Profit from the Enormous Gig Economy
The traditional economy and workplace continues to evolve. The results of that transition are very evident in the gig economy. The gig economy itself has grown rapidly reaching a value of more than $455 billion last year.
More and more workers are shunning the typical 9 to 5 office job. It is expected that more than 50% of the U.S. workforce will be employed in the gig economy by 2027. Further, the gig economy is expanding approximately three times as fast as the total workforce. In short, expect freelancing and entrepreneurialism to continue to grow in the coming years. that continued growth paves the way for these stocks to grow as well.
Fiverr (FVRR)
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Fiverr (NYSE:FVRR) connects businesses and freelancers and is one of the better gig economy stocks available.
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The company operates a platform that connects 4.2 million buyers with projects of varying lengths, complexity, and value. It’s obviously valuable for both businesses looking for freelancers and freelancers themselves. Fiverr is fundamentally headed in the right direction which makes all the difference in the world.
Growth isn’t particularly strong, but Fiverr’s revenues increased by more than 12%, reaching $92.5 million in the third quarter. What’s important from an investment perspective is that the company is pivoted into profitability.
Fiverr reported a loss of $11.4 million a year ago. That loss turned into a net income of $3 million in the third quarter. The company’s pivot into profitability is a big positive in the emerging sector which is often marked by losses. While Fiverr may not provide the outsized growth that some other firms in the space do, it is much more stable.
Uber (UBER)
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It wasn’t very long ago that Uber (NYSE:UBER) looked like a complete failure. However, like Fiverr, the company has had a turnaround and has evolved into a vital gig economy stock that is worthy of investor consideration.
2022 it was a slap in the face for a lot of companies. The quantitative easing era was over and the free money sloshing around the economy dried up. Companies everywhere went on a campaign to reduce costs and find efficiencies. Uber was one of those firms. That isn’t to say the company found profitability in 2022, it didn’t. Instead, through the first nine months of the year it lost almost $10 billion.
The company figured something out during that time. Fast forward a year later, it reported a net income of $458 million during the same period. Those metrics provide the argument for investing in Uber which is a big part of the gig economy. The ride-share economy provides income for lots of workers– whether they work as a taxi, delivery, etc.
Upwork (UPWK)
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Upwork (NASDAQ:UPWK) Is a lot like Fiverr, mentioned above. Both firms operate gig economy platforms that connect the freelancers to work and both stocks are fairly similar.
There are some notable differences between the two platforms. Upwork is the bigger of the two, with a market share of nearly 60%. It also tends to attract better skilled workers and thus tends to pay more. Overall though, there are more similarities than differences.
I mentioned above that Fiverr grew by 12% in the most recent period. Upwork is very close, and grew at 11%. Its revenues reached $175.7 million compared to $92.5 million for Fiverr. The other similarity is that both firms are both currently in the early stages of profitability. Upwork recorded $16.3 million in net income from those revenues. However, the company posted a net loss in the previous quarter and net income of $17 million in the quarter prior to that.
While neither stock is a slam dunk investment, each of the firms have created strong platforms in a growing sector. That will continue to be a strong advantage moving forward.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
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