Why Upwork Stock Plunged Today
Key Points
Upwork is working to make artificial intelligence (AI) a tailwind, rather than a crisis.
Management expects growth to reaccelerate in 2026.
Shares of Upwork (NASDAQ: UPWK) sank on Tuesday after the freelancer marketplace reported a decline in active clients.
By the close of trading, Upwork's stock price was down more than 19%.
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Navigating AI trends
Upwork's fourth-quarter revenue rose 4% year over year to $198.4 million. The company's gross services volume (GSV) -- the total dollar value of all transactions facilitated by its platform -- increased 3% to $1 billion.
Upwork is making inroads with small and midsize businesses. GSV from its Upwork Business Plus offering for SMBs increased 24% sequentially.
The work marketplace is also investing aggressively in artificial intelligence (AI). AI-powered search recommendations helped boost GSV by over $100 million in 2025. Moreover, annualized GSV from AI-related work climbed more than 50% to over $300 million in the fourth quarter.
Still, active clients on Upwork's platform fell 6% to 785,000. This understandably concerning decline likely spooked investors.
However, during a conference call with analysts, chief financial officer Erica Gessert noted that Upwork's churn rate improved throughout 2025 -- and the company expects to report active client growth in the first quarter of 2026.
Growth is set to accelerate
In turn, Upwork's 2026 guidance includes:
- Revenue of $835 million to $850 million, compared to $787.8 million in 2025
- Adjusted earnings per share of $1.43 to $1.48, compared to $1.41
"Our diversified growth path across AI, SMB, and enterprise gives us confidence in our guidance of 4% to 6% GSV growth and 6% to 8% revenue growth for the year," Gessert said.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.