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Should UPWK investors lower expectation due to the Russia-Ukraine conflict?
Upwork Inc. (NASDAQ:UPWK) announced earlier this month the suspension of all business operations in Russia and Belarus which will take full effect by May 1. The freelancing platform also withdrew its previously issued first-quarter and 2022 guidance due to the ongoing Russian invasion of Ukraine, acknowledging that approximately 10% of Upwork’s total revenue in 2021 came from Ukraine, Russia, and Belarus.
The news weighed on UPWK, as several analysts chimed in with price-target cuts shortly after the announcement. The stock fell to an almost two-year low just one session later, and hit yet another low of $17.85 on March 15. The 50-day moving average rejected the stock's recent rally off these lows, and has been acting as a ceiling since late October. UPWK has shed 34% this year.
Drilling down, the freelance platform company reported $502.8 million in revenues and $56.2 million in net losses for fiscal 2021, which marked 35% revenue growth and a net income decrease of $33.4 million since fiscal 2020. UPWK's annual revenues have also increased 98% and Upwork's annual net income is down by about $36 million over the past three years.
UPWK is expected to become profitable next year with an average earning per share (EPS) estimate of $0.23, indicating a $0.40 increase from the current year’s earnings of -$0.17. The company is also estimated to maintain a high revenue growth rate next year with 26% expected rise. In addition, UPWK holds a decent balance sheet with $684.8 million in cash and $584.4 million in total debt. Overall, Upwork stock offers a relatively safe option for growth investors at its current price-sales ratio of 4.75.