IPO for Mountain View’s Upwork a hit with investors.
Upwork, a global marketplace for freelance work, found an enthusiastic reception for its Wall Street debut Wednesday.
Trading under the symbol UPWK, the company saw shares begin trading at $23. They rose to $23.49 before closing at $21.18, a 41 percent gain over the $15 offering price.
Even before its offering, Upwork saw positive signs, despite not having any profits. The company had raised the price of the 12.48 million shares it expected to sell from an earlier estimate of $12 to $14. At that price, the company would have been worth $1.5 billion; due to its sharp rise Wednesday, it is now worth $2.1 billion.
Upwork’s freelancers specialize in skilled work that can be done online. It has 475,000 clients employing 375,000 freelancers — including accountants, programmers, web developers, graphic designers, customer service reps, tech service professionals, and content marketers. The company takes a cut, typically around 15 percent, of each gig
it arranges and said sales are growing about 20 percent a year.
“We operate the largest online global marketplace that enables businesses to find and work with highly-skilled freelancers as measured by gross services volume,” Upwork said in a public filing.
Upwork “timed its IPO to perfection,” said Rohit Kulkarni, managing director and head of research at SharesPost, a marketplace for shares in private tech companies.
“We are in the middle of one of the tightest labor markets and today had the strongest job number in six months,” he said. “Upwork is a key players on several planes, including the labor market and the fact that Millennials like to work as self-employed entrepreneurs. It’s no surprise that it did so well.”
Upwork, which operates in 180 countries, has faced some criticism for providing a way for overseas workers to underbid Americans on contract jobs, a charge it disputes. Last year it launched a U.S.-only website to provide a forum where American workers would compete against each other, rather than cheaper overseas labor.
It also tracks workers electronically, showing clients screenshots of their computers and summaries of their work.
For the 12 months ended June 30, Upwork helped arrange 2 million projects worth $1.56 billion, which generated $228 million in revenue. In that fiscal year, it lost $4.1 million on $202.6 million in revenue.
“It does have some near-term losses, but investors are telling the marketplace that expected growth more than makes up for that,” said Matt Kennedy, senior IPO market strategist at Renaissance Capital, which tracks IPOs. “It’s a high-growth platform with potentially high margins that are improving.”
Proceeds from the $187 million IPO will be split between the company and early investors. Some will be used to repay $19 million of a loan from Silicon Valley Bank, Upwork said.
Upwork’s IPO comes as Wall Street seems increasingly welcoming to tech companies. Eventbrite, DocuSign, Dropbox, SurveyMonkey and others have had successful offerings this year.
Upwork was formed when two rival freelance marketplaces, Elance and oDesk, merged in 2014.
“The market is ready for us and we’re ready for the market,” Upwork CEO Stephane Kasriel told CNBC ahead of the IPO. Millennials — who are now older and in decision-making roles with “real budgets” — are increasingly interested in freelance work, he said. “For them, what we do makes a ton of sense.”