In this article we will take a look at some of the best gig economy stocks to buy now.
Gig economy seems to be one of the most anti-fragile industries since it experiences growth even during the most difficult times. The online freelancing market saw a huge boost during the pandemic, when millions of workers were either laid off or were forced to work from home. These workers found new possibilities of making money using freelancing platforms like Upwork and Fiverr. The next downturn came in 2022 amid rising inflation and the Federal Reserve’s policy of increasing interest rates. As inflation started to bite people’s paychecks and eat into savings, millions of people sought to find side hustles for extra income.
The October 2022 jobs report showed the number of Americans working part-time jobs along with their full-time jobs jumped 6% during the month on a year-over-year basis to reach 4.5 million people. A Wall Street Journal report quoted a survey from jobs platform Monster.com, according to which about three-quarters of workers said they need extra jobs due to inflation. The report also quoted a survey of 4,700 people conducted by Prudential Financial Inc. According to the results, 81% of Gen-Z and 77% of millennial workers have pursued or plan to find gig work to supplement their income.
According to a study by National Bureau of Economic Research, independent contractors may account for about 15% of the total workforce in America. This surprising metric paints a different picture of the labor market since the Bureau of Labor Statistics had estimated this figure to be just 7%. Here’s how the National Bureau of Economic Research explains its findings:
“We find that, upon probing, roughly one in 10 workers who initially reports working for an employer on one or more jobs (and thus is coded as an employee) is in fact an independent contractor on at least one of those jobs. Incorporating these miscoded workers into estimates of work arrangement on the main job nearly doubles the share who are independent contractors, to about 15 percent of all workers. Young workers, less-educated workers, workers of color, multiple-job holders, and those with low hours are more likely to be miscoded. Taking these workers into account substantively changes the demographic profile of the independent contractor workforce. Our research indicates that probing in household surveys to clarify a worker’s employment arrangement and identify all low-hours work is critical for accurately measuring independent contractor work.”
The rise of online freelancing platforms like Upwork Inc. (UPWK) and Fiverr International Ltd (NYSE:FVRR) has allowed millions of people to find gigs to supplement their income. Many are finding full-time jobs on these platforms as well. Upwork Inc. (UPWK) published a study back in December 2022 which shows the stunning impact of these freelancing platforms on the overall economy and also the importance of gig economy. Upwork Inc. (UPWK) said that its study of US workforce showed that a whopping 60 million Americans performed freelance work in the past 12 months. This is 39% of the entire US workforce.
American freelancers contributed an astounding $1.35 trillion in annual earnings to the U.S. economy, $50 billion more than in 2021.
Amid the trends like “Quiet Quitting” and “The Great Resignation,” the importance of paying attention to gig economy stocks becomes even more important. The huge market these gig economy companies are operating in is enough to make any beginner investor tempted to study and consider investments in the space. A report from 2019 said that the global gig economy generated $204 billion in gross volume. This figure was expected to reach $455 billion by 2023. Importantly, transportation-based services like Uber and Lyft accounted for 58% of this total volume in 2019.
Impact of Gig Economy on Labor Market
There’s been a lot of talk about the strong labor market of the US and how the Federal Reserve’s consistent rake hikes have been unable to cull the excessive job openings. Interestingly, gig economy has a small but very important role to play in all of this. As we mentioned above, the number of Americans having multiple jobs is rising. But not everyone is finding a side job because of financial hardships. Many Americans are doing multiple jobs because of the sheer availability of these jobs, the flexibility of these jobs and an urge to earn some extra cash. According to a Bloomberg report, Julia Pollak, chief economist at jobs website ZipRecruiter Inc., explain this trend in these words:
“Public perception is that people take on multiple jobs when the economy is bad because they’re not earning enough in their job. People take on additional jobs when there are additional jobs to be had.”
Photo by Peggy Anke on Unsplash
Our Methodology
For this article we scanned Insider Monkey’s database of 943 hedge funds and picked 11 companies operating in the gig economy space. Most of these companies are operating platforms that allow people to buy and sell services online. Some of these companies play a key role in the gig economy and benefit from the activity taking place in the industry. Some notable names in the list include Uber Technologies Inc (NYSE:UBER), PayPal Holdings Inc (NASDAQ:PYPL) and Upwork Inc (NASDAQ:UPWK).
11. Rover Group Inc (NASDAQ: ROVR)
Number of Hedge Fund Investors: 15
Rover Group Inc (NASDAQ:ROVR) is an online marketplace to buy and sell pet care services. People can earn money on the platform by offering services such as dog walking and pet sitting. As of the end of 2022, Rover Group Inc (NASDAQ:ROVR) had about 1.6 million users.
During the fourth quarter, Rover Group Inc (NASDAQ:ROVR)’s GAAP EPS came in at $0.03, beating estimates by $0.03. Revenue in the quarter jumped 36.7% year over year to reach $51.95 million, beating estimates by $1.8 million.
10. Fiverr International Ltd (NYSE:FVRR)
Number of Hedge Fund Investors: 17
Fiverr International Ltd (NYSE:FVRR) is the second biggest freelancing platform in the world, second only to Upwork Inc. (UPWK). As of the end of 2021, the company had 4.2 million active buyers (people looking to buy freelance services).
Earlier this month, BTIG started covering Fiverr International Ltd (NYSE:FVRR) with a Buy rating.
The firm said Fiverr International Ltd (NYSE:FVRR) is the “purest way to play the attractive online freelancing opportunity with the lowest execution risk.”
A total of 17 hedge funds tracked by Insider Monkey have stakes in Fiverr International Ltd (NYSE:FVRR) as of the end of the fourth quarter of 2022. The biggest hedge fund stakeholder of Fiverr International Ltd (NYSE:FVRR) is Paul Marshall and Ian Wace’s Marshall Wace LLP which owns a $15 million stake in the company.
Like Uber Technologies Inc (NYSE:UBER), PayPal Holdings Inc (NASDAQ:PYPL) and Airbnb Inc (NASDAQ:ABNB), Fiverr International Ltd (NYSE:FVRR) is one of the biggest beneficiaries of the gig economy boom.
9. Upwork Inc (NASDAQ:UPWK)
Number of Hedge Fund Investors: 30
Upwork Inc (NASDAQ:UPWK) is one of the most important companies in the gig economy industry. It’s a market leader in the freelancing industry. During the fourth quarter the company’s adjusted EPS came in at $0.04, beating estimates by $0.07. Revenue in the quarter increased by 18% year over year to total $161.44 million.
Upwork Inc (NASDAQ:UPWK) is continuously rolling out new features to attract new talent and employers. The company’s management said in its latest earnings call:
I think we noted that we’ve seen searches for AI-related services on our website grow 3,900% in the last 4 months alone as well as job post growing 1,400% in the last couple of months. So this is just the beginning, I think, of many ways that this will impact our business very positively and the way that our customers can take advantage of Upwork as they’re navigating kind of this next frontier of technology.
As of the end of the fourth quarter of 2022, 30 hedge funds tracked by Insider Monkey had stakes in Upwork Inc (NASDAQ:UPWK).
8. Payoneer Global Inc (NASDAQ:PAYO)
Number of Hedge Fund Investors: 31
Payoneer Global Inc (NASDAQ:PAYO) makes it to the list of the best gig economy stocks because the company’s platform is widely used by freelancers all over the world to send or receive payments. Payoneer Global Inc (NASDAQ:PAYO) also has partnerships with major freelancing platforms like Upwork that allows millions of freelancers on these platforms to use Payoneer Global Inc (NASDAQ:PAYO) to access their funds. Recently, Payoneer Global Inc (NASDAQ:PAYO) announced its partnership with Cloud software company Zoho. Under the partnership, Payoneer will provide payment solutions to small businesses using Zoho’s Cloud accounting platform.
As of the end of the fourth quarter of 2022, 31 hedge funds tracked by Insider Monkey had stakes in the company.
Number of Hedge Fund Investors: 41
Millions of people use DoorDash Inc (NYSE:DASH) to order and deliver food. In its latest earnings call, the company said over 3 million Dashers (people who deliver food using DoorDash platform) come to the platform every 90 days.
As of the end of the fourth quarter of 2022, 41 hedge funds have stakes in DoorDash Inc (NYSE:DASH) according to Insider Monkey’s database of 943 hedge funds. The biggest stakeholder of DoorDash Inc (NYSE:DASH) is Hillhouse Capital Management of Lei Zhang which owns a $220 million stake in the company.
6. LYFT Inc (NASDAQ:LYFT)
Number of Hedge Fund Investors: 45
LYFT Inc (NASDAQ:LYFT) shares gained earlier this month after the company’s new CEO David Risher confirmed reports LYFT Inc (NASDAQ:LYFT) was planning to initiate new layoffs. An earlier report from the Wall Street Journal had reported that new layoffs at LYFT Inc (NASDAQ:LYFT) could affect as much as 1200 workers.
Insider Monkey’s database of 943 hedge funds shows 45 hedge funds had stakes in LYFT Inc (NASDAQ:LYFT), compared to 37 hedge funds in the previous quarter. The biggest stakeholder of LYFT Inc (NASDAQ:LYFT) is Panayotis Takis Sparaggis’s Alkeon Capital Management which owns a $59 million stake. In addition to Uber Technologies Inc (NYSE:UBER), PayPal Holdings Inc (NASDAQ:PYPL) and Upwork Inc (NASDAQ:UPWK), LYFT is one of the best gig economy stocks to buy now.
5. Airbnb Inc (NASDAQ:ABNB)
Number of Hedge Fund Investors: 54
Airbnb is one of the best gig economy stocks to buy because it provides a way to earn extra income to millions of people around the world. Airbnb services are also used by freelancers and digital nomads and the remote work trend is also helping the company.
Airbnb is seeing growth as more and more people rent out their spaces to earn extra income. Here’s how the company explained this trend in its latest earnings call:
“… we saw tremendous growth in our supply on Airbnb. We ended 2022 with 6.6 million active listings. Now excluding all the Mainland China listings we removed in July, we grew supply by 900,000 listings, or 16% compared to a year ago, representing an acceleration in growth in listings relative to Q3. Now why are listings accelerating in growth? We believe there’s probably 2 factors that drove this growth. First, demand to drive supply. Post or attracted the supplemental income that they can earn an Airbnb, which is often critical during tough times.”
4. Shopify Inc (NYSE:SHOP)
Number of Hedge Fund Investors: 66
Shopify Inc (NYSE:SHOP) makes it to our list of the best gig economy stocks because it’s one of the biggest beneficiaries of the ecommerce boom in the world. This boom aligns with the gig economy trends since more and more people are using ecommerce stores to sell stuff online to make extra money or reach a level where they are able to quit their full-time jobs. Estimates suggest there are over 4 million ecommerce stores that are made using the Shopify Inc (NYSE:SHOP) platform.
There’s also a huge demand of freelancers who are experts in Shopify technologies on platforms like Upwork and Fiverr.
As of the end of the fourth quarter of 2022, 66 hedge funds tracked by Insider Monkey were bullish on the stock, up from 62 funds in the previous quarter.
3. PayPal Holdings Inc (NASDAQ:PYPL)
Number of Hedge Fund Investors: 115
PayPal is one of the most popular payment platforms used by freelancers all over the world. In this way PayPal thrives because of the gig economy boom. Freelancers on platforms like Upwork, freelancer.com and Fiverr use PayPal to receive payments. According to PayPal’s Freelancer Insights report from 2017, PayPal was the most popular platform for payments among freelancers.
2. Uber Technologies Inc (NYSE:UBER)
Number of Hedge Fund Investors: 135
Last year, Uber said about 5 million people are providing ride-hailing or food delivery services using Uber. In February the company posted strong Q4 results as it said active drivers hit an all-time high during the quarter. Uber achieved the milestone of hitting 2 billion trips in a single quarter for the first time.
Out of the 943 hedge funds tracked by Insider Monkey, 135 hedge funds had stakes in the company. The biggest hedge fund stakeholder of the company was Panayotis Takis Sparaggis’s Alkeon Capital which Management which owns a $317 million stake.
1. Microsoft Corp (NASDAQ:MSFT)
Number of Hedge Fund Investors: 259
Microsoft’s LinkedIn platform is becoming one of the most important resources for freelancers around the world as companies in US and Europe begin to post remote jobs on the platform. In 2021, LinkedIn announced its Services Marketplace using which freelancers could sell their services to businesses as freelancers. In October 2021, the company said a whopping 2 million providers joined its Services Marketplace. Analysts believe LinkedIn could soon become a top competitor of online jobs platforms like Upwork, playing a key role in the gig economy space.
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Disclosure: None. 11 Best Gig Economy Stocks To Invest In is originally published on Insider Monkey.
