Why Upwork Stock Was Racing Higher This Week

Gig job facilitator Upwork (NASDAQ: UPWK) probably doesn't want this week to end. Its shares have been racing higher, advancing by nearly 23% in price week to date as of early Friday morning, according to data compiled by S&P Global Market Intelligence. Investors were encouraged by the company's preliminary third-quarter numbers, plus news of a restructuring plan and an analyst's bullish new research note.

Preliminary results and pink slips

Upwork's major news dump happened on Wednesday, when it unveiled those quarterly figures and the restructuring initiative.

Regarding the former, Upwork is predicting that it will post sales of around $194 million -- well above the top end of its previous guidance, which was $184 million. Better, the new number trounced the consensus analyst projection of slightly over $182 million. The dynamic was the same with the company's updated net income line, forecast at $28 million.

If Upwork's future is bright, not all of its employees will get to experience the good times directly. Management said it will pull the lever on an extensive set of workforce reductions that would affect around 21% of staff. This should reduce the company's costs by roughly $60 million per year.

The following morning, Canaccord Genuity analyst Maria Ripps published a follow-up on those developments. She maintained her buy recommendation and $15-per-share price target in the report. According to media reports, Ripps feels that the preliminary figures and rationalization plan indicate that management is clearly committed to producing meaningful growth on the bottom line.

Upwork is up in the air just now

News of employees losing their jobs isn't heartening, but perhaps a slimmer and more effective Upwork can indeed produce better fundamentals. Investors should bear in mind, however, that widespread gig work is still a relatively recent phenomenon, and it's still not fully clear it'll continue to trend hot. It might be advisable to temper enthusiasm for these recent developments.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Upwork. The Motley Fool has a disclosure policy.