Avoid These 3 Overvalued Gig Economy Stocks

One of the many negative effects of the pandemic was massive job losses. This led workers to find gig jobs at companies such as Airbnb (ABNB), Uber Technologies (UBER), and Fiverr International (FVRR). Now that the economy is rapidly improving and job prospects are bullish, these stocks should be avoided.

By Patrick Ryan

shutterstock.com via StockNews

This story originally appeared on StockNews

One of the many negative effects of the pandemic was massive job losses. This led workers to find gig jobs at companies such as Airbnb (ABNB), Uber Technologies (UBER), and Fiverr International (FVRR). Now that the economy is rapidly improving and job prospects are bullish, these stocks should be avoided.

Gig economy stocks have taken off during the pandemic. The rise was somewhat justified as more businesses turned to gig workers and more people turned to gig employment during the pandemic.

However, now that we are emerging from the pandemic, gig economy stocks are clearly overvalued. Job-seekers and employers who turned to the gig economy during the pandemic will now largely return to traditional work-employee relationships. This spells bad news for gig economy stocks.

Let's take a quick look at three gig economy stocks that are overvalued and primed for a decline: Airbnb (ABNB), Uber Technologies (UBER), and Fiverr International (FVRR).

Airbnb (ABNB)

ABNB is currently trading at $163. The stock's 52-week high is $219. UBER's 52-week low is $121.50. ABNB is a POWR Ratings dud with an overall grade of D, which translates into a Sell rating. The company also has grades of D in the Value, Growth, and Stability components. Click here to find out how ABNB grades in the Momentum, Quality, and Sentiment components.

Of the 19 publicly traded companies in the Travel - Hotels/Resorts industry, ABNB is ranked 13th. You can find stop stocks in this industry by clicking here. Analysts are not exactly hyper-bullish on ABNB. As more traveling picks up, people will feel more confident staying at actual hotels that are thoroughly cleaned instead of ABNB homes that might have a coronavirus variant on the premises.

Uber Technologies (UBER)

UBER, priced at $52, is trading $12 away from its 52-week high of $64. There is no doubt UBER bookings will increase as society gradually reopens. However, investors have been investing with the reopening in mind, meaning the uptick in UBER revenue is already baked into its current price.

UBER has an overall grade of D, which is a Sell rating in our POWR Ratings system. The company also had grades of D in the Quality, Sentiment, and Value components. If you are curious about how UBER grades out in the remaining components such as Momentum, Stability, and Growth, you can find out by clicking here. Of the 76 publicly traded companies in the Technology - Services industry, UBER is ranked 65th. Click here to find top stocks in this industry.

The Biden administration is now considering classifying gig workers as employees. UBER will be on the hook for hundreds of millions of dollars in benefits and pay if this change is made. The reclassification of UBER's workforce would put a sizable and unexpected dent in the company's profits in the years and decades ahead.

Fiverr International (FVRR)

Ask anyone who has used FVRR about the website's user experience design, and you will find it isn't exactly the easiest gig economy platform to use. FVRR certainly provides employers with a cheap labor force, yet the primary reason people are flocking to the platform is that unemployment is still high. As more people become employed, that will change.

FVRR is a POWR Ratings disappointment with an overall grade of F, translating into a Strong Sell rating. The company has a grade of F in the Value component and grades of D in the Quality, Sentiment, and Stability components. If you are curious about how FVRR fares in the remainder of the components, including Momentum and Growth, you can find out by clicking here.

While the mad scramble for low-paying gig jobs has certainly been a boon for FVRR's bottom line, the stock is overpriced. The stock has a forward P/E ratio of 395.61.


ABNB shares were trading at $168.26 per share on Wednesday morning, down $0.64 (-0.38%). Year-to-date, ABNB has gained 14.62%, versus a 11.82% rise in the benchmark S&P 500 index during the same period.



About the Author: Patrick Ryan


Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.

More...

The post Avoid These 3 Overvalued Gig Economy Stocks appeared first on StockNews.com

Related Topics

Editor's Pick

Everyone Wants to Get Close to Their Favorite Artist. Here's the Technology Making It a Reality — But Better.
The Highest-Paid, Highest-Profile People in Every Field Know This Communication Strategy
After Early Rejection From Publishers, This Author Self-Published Her Book and Sold More Than 500,000 Copies. Here's How She Did It.
Having Trouble Speaking Up in Meetings? Try This Strategy.
He Names Brands for Amazon, Meta and Forever 21, and Says This Is the Big Blank Space in the Naming Game
Business News

These Are the Most and Least Affordable Places to Retire in The U.S.

The Northeast and West Coast are the least affordable, while areas in the Mountain State region tend to be ideal for retirees on a budget.

Thought Leaders

The Collapse of Credit Suisse: A Cautionary Tale of Resistance to Hybrid Work

This cautionary tale serves as a reminder for business leaders to adapt to the changing world of work and prioritize their workforce's needs and preferences.

Health & Wellness

5 Essential Steps to Expand Your Vision and Start Living Your Dream Life

It's time to break free from your comfort zone and expand your vision. When you refuse to settle for a mediocre life, you can start building a life you love.

Business Solutions

Learn to Build a ChatGPT Bot for Only $30

If you want to see what AI can do for your business, grab this course bundle today.

Business News

I'm a Former Google Recruiter. Here's How to Land a Job in Tech — and What Can Blow Your Interview

A former Google recruiter says layoffs may be trendy, but tech workers are always needed. Here's how to land a job at a major tech company.

Business News

The 'Airbnbust' Proves the Wild West Days of Online Vacation Rentals Are Over

Airbnb recently reported that 2022 was its first profitable year ever. But the deluge of new listings foreshadowed an inevitable correction.