2018 has proven to be a good year for people with stakes in publicly traded companies. While companies like Facebook and Tesla have suffered short-term losses from bad publicity, the Dow Jones industrial average has demonstrated a clear upward trend. Strong investor confidence makes the stock market a good source for cheap financial capital for well-developed companies.
This market situation has been noted by the leaders of various major tech companies that were privately traded in past years. During the first half of 2018, startups valued at $8.7 billion filed their initial public offerings. While the future health of the economy is uncertain, companies are continuing the follow this trend of going public while the stock market is booming.
Upwork Goes Public to Raise Revenue
One of the largest startups to enter public trading is Upwork. Upwork is the most popular hub for freelancers and clients on the Internet. Many freelancers find clients exclusively through the services offered by Upwork.
Upwork provides freelancers and their clients with job boards, collaboration tools, an invoice system, and a bill and payment system. The company also acts as a mediator to resolve disputes about pricing and project quality. The freelancer intermediary adds value by giving freelancers the resources to succeed as self-employed writers, programmers, researchers, or designers. Upwork is a cornerstone of the gig economy on the Internet.
According to the tech news site Recode, Upwork has quiety filed for its IPO. If Upwork does not encounter any unexpected difficulties, the company may be a publicly traded entity as early as Q4 2018. The CEO of Upwork, Stephane Kasriel, has not yet commented on the IPO deal.
Upwork’s decision to file an IPO could be related to the funding goals of the company. When Upwork was formed after the merger of oDesk and Elance, the in-site freelance fees were increased from about 10 percent to 20 percent of project prices. This fee hike was part of the broader strategy to increase the revenue of Upwork. It is reasonable to suggest that the decision to make Upwork public is part of a similar strategy.
The revenue figures of Upwork are confidential, so it is unclear if the company is struggling to raise revenue. In the past, some investors speculated that Upwork might be valued at $1 billion. This valuation may be an inflated estimate. The public will soon learn of the the company’s official valuation, but it is likely that Upwork will continue to grow with the tech industry.
Expect Upwork’s Value to Grow (and Fall) With Tech Trends
Freelancers on Upwork offer a wide variety of skills. If you glance at the general job feed without selecting any specialties, you will notice jobs ranging from research assignments for PhD economists to programming jobs for C++ experts. The site also offers opportunities for creative fields like writing and graphic design.
Despite the diversity of job offerings on Upwork, a large amount of the company’s revenue comes from tech jobs. In 2018, blockchain skills were in high demand across the site. Blockchain programmers, ICO whitepaper writers, and marketing experts enjoyed large returns as topics like Bitcoin and Ethereum buzzed across media outlets. Out of over 5,000 skills on the Upwork Skills Index, blockchain took the top position.
Skills that compliment blockchain projects are also highly demanded by clients on Upwork. For example, Go, a programming language created by Google to create blockchain applications, was in the top-20 list during Q2 2018. As distributed ledgers become commonplace in society, demand for skilled freelancers who understand blockchain protocols will increase.
Some skeptics of blockchain are concerned that blockchain’s gains in the tech sector are driven by fanaticism and irrational exuberance. While this may be a valid critique of many cryptocurrencies, it likely does not apply to distributed ledgers. Distributed ledgers are suitable for government transfers, business contracts, and financial transactions. The technology is pervasive enough to be relevant for the forseeable future.
Upwork and other companies that are filing IPOs may regret their decisions to go public if a tech bubble crashes the economy. Nearly all stock market gains in 2018 came from the tech sector. A bubble would imply that 2018 is a poor year to enter the stock market. If a tech bubble pops, a large amount of the demand for programmers and similar freelancers would vanish. Such an economic shock would wreck havoc on the revenue flows of Upwork.
This unfortunate outcome is possible, but many experts believe it is unlikely. Financial analysts expect the value of blockchain to grow significantly over the next decade. Data analytics firm IHS Markit expects the global business value of blockchain to grow from $2.5 billion in 2017 to $2 trillion in 2030. If the direction of this trend is accurate, Upwork will continue to grow in value. Upwork’s decision to go public may also accelerate revenue growth as the public comes to terms with a blockchain-based society.