What Happened?
Shares of online work marketplace Upwork (NASDAQ:UPWK) fell 16.6% in the afternoon session after the company issued disappointing financial guidance for the upcoming quarter and reported a drop in a key user activity metric. The company's revenue forecast for the first quarter of 2026 was $194.5 million at the midpoint, falling 3.1% short of Wall Street's estimates. Adding to investor concerns, Upwork's Gross Services Volume, a measure of activity on the platform, declined by 5.6% year-over-year to 785,000. This weak outlook overshadowed the company's fourth-quarter results, which had beaten analysts' expectations. For the quarter, Upwork reported sales of $198.4 million and an adjusted profit of $0.36 per share, which was 15.5% above consensus estimates.
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What Is The Market Telling Us
Upwork’s shares are very volatile and have had 28 moves greater than 5% over the last year. But moves this big are rare even for Upwork and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 6.9% on the news that software stocks continued to pull back as investors assessed the potential for new AI automation tools to compete with established software platforms. The drop followed Anthropic's unveiling of a major upgrade to its enterprise AI tools, which were positioned as systems capable of end-to-end workflow automation. The company framed the tool as a direct replacement for repetitive, software-driven work, not just an assistant. This announcement ignited investor fears that AI was shifting from a productivity enhancer to a direct substitute for large parts of the software and services industry.
Upwork is down 20.8% since the beginning of the year, and at $15.71 per share, it is trading 29% below its 52-week high of $22.11 from January 2026. Investors who bought $1,000 worth of Upwork’s shares 5 years ago would now be looking at an investment worth $295.04.
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