The gig economy has been battered, but are we about to see a rebound in these ASX stocks?
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The Covid-19 crisis had upended the traditional 9-5 world and created a side hustle phenomenon that saw millions of people pursue gig work for additional, or sometimes even primary, income.
Almost a year post the pandemic however, that trend has somewhat faded, leaving many gig economy stocks in the doldrums.
Airtasker (ASX:ART), which became an instant market darling when it listed in March 2021, has seen its share price shrink by more than half.
Freelancer.com (ASX:FLN), one of the first marketplaces to list on the ASX, has fallen by 65% in the past 12 months.
Meanwhile hiPages (ASX:HPG), an exclusive marketplace for tradies, also saw a similar drop over the same period.
But recent earnings have given strong indications that things could be starting to turn around.
Shares in NYSE-listed Fiverr for example has surged by over 50% this year as the company’s international earnings beat estimates in the last quarter.
Uber, which not only offer rides but also services like food and grocery delivery, is also up almost 40% this year.
A lot of that share price pickup has come from the strong growth and profit numbers in Uber’s latest quarterly earnings.
In Australia, there’s also a feeling of optimism that the bottom might be near.
In the last quarter, a strong organic growth saw Airtasker’s revenue grow by 40% compared to the pcp.
Airtasker’s CEO Tim Fung, while cautious about the state of the economy, commented that he was “excited for what’s ahead”.
Fung did acknowledge that consumer demand on the platform has recently started to taper off as interest rates go up.
But at the same time, he’s also seeing a counterbalance and a huge uplift in the number of people wanting work on Airtasker.
“Because of that, the completion rate on Airtasker has gone up significantly, and that actually more than offsets any softening in demand,” he told Stockhead.
Looking ahead, Fung believes that only the platforms which are really valuable to both customers and taskers can come through the other side of this difficult environment.
“If you’ve got good unit economics and are really valuable to users, then I think you’re going to be just fine and come out of this really strong,” Fung added.
“But for the others, they will either get consolidated or exit the market.
“And we’re already starting to see that trend, which I think will likely continue into 2023.”
Meanwhile at hiPages, the first half has also shown signs of a pick-up, with revenues up by 8% to $32.6m.
hiPages’s marketplace connects qualified tradies with consumers across Australia and NZ for home improvement jobs by facilitating the communication, payment, and rating.
The platform is subscription-based where tradies can advertise their services and use hiPages’ bespoke solution.
CEO Roby Sharon-Zipser told Stockhead that over the past year, he’s seen a huge amount of demand for tradie services like never before.
“In the last 12 months, the increase in volume was unprecedented; we didn’t have to do much to market our platform. There was just so much work.”
According to Sharon-Zipser, Aussies had a lot of cash saved up because discretionary spending like travel was either restricted or unaffordable – meaning that a lot of that money went to home improvements.
“This isn’t just a seasonal end-of-year spike because those activities have continued well into the month of January and February,” he added.
While it’s never easy to pick a market bottom, experts project that by 2028, the global gig economy could reach a valuation of $US873 billion (from US$355b in 2021).
It’s a reasonable prediction given that high inflation worldwide could force average wage earners to seek extra income elsewhere.
That said, not all marketplaces would be growing at the same pace. Some might grow and some might shrink depending on the business model.
For example Freelancer, which focuses more on computer-based work like web and graphic design, saw its volumes for the full FY22 year fall by 10%.
The types of services that Freelancer offers surged significantly during the Covid lockdown as people made websites for hobbies or new ventures, but have since wound down.
hiPages’ business model on the other hand, which generates revenue from tradies’ subscriptions, is countercyclical and thrives in times like today when consumer confidence softens.
Sharon-Zipser explained that tradies would often come to hiPages’ marketplace when they see their bookings dip.
“When they don’t have a full book of confirmed work over the next three to six months, that’s when they come to us to fill their diary,” he said.
In the last half, hiPages saw its tradie registrations increase by 38% which led Sharon-Zipser to signal a strong outlook.
“We’re on track to deliver margin positive net cash flow by the end of FY 2024.
“hiPages is a self-generating cash flow generating business, which is unusual in the technology space,” he told Stockhead.