The Leading Brands Benefiting from the Gig Economy Boom
Talkspace, an online and mobile therapy company, is reportedly planning to go public this year through a merger with a SPAC (special purpose acquisition company) that will operate as Talkspace and expects to be listed on the Nasdaq under the symbol “TALK.” Talkspace is the latest in a succession of businesses that are disrupting workforce and services acquisition on a large scale. Welcome to the gig economy.
Before the pandemic, the gig economy grew year-over-year with expectations from industry insiders and investors alike that the growth would continue over the near-term. The impact of COVID-19 only accelerated that trend. As the number of people working remotely on a short-term contract or freelance basis increased dramatically, the gig economy exploded. By 2027, Business2Community predicts that 60% of the workforce will consist of independent professionals.
As the gig economy continues to heat up, let’s look at the major publicly traded players in the space.
With more employees turning into freelancers, companies are trying to find ways to locate these professionals during their online searches. Marketplace platforms such as Fivver and UpWork allow gig workers to post their services, credentials, experience, and rates to interested companies. Industries can range from writers to architects and fashion designers on these marketplace platforms. Fiverr is doubling down in the gig economy, announcing the acquisition of Working Not Working, a platform for high-end creative talent with clients that include Google, Netflix, Spotify, Droga5, and Wieden+Kennedy. Fivver shares are up by some 60% for the year, while UpWork’s have risen roughly 75%.
Ridesharing companies have been some of the most talked-about disruptors in the transportation industry. These companies offer many people a way to turn their cars into money-making ventures as consumers use their platforms as lower-cost alternatives to traditional taxis. Both Uber and Lyft have come up against legislative efforts to classify gig economy workers as employees – which would mandate these platforms provide a host of benefits and protections. In addition to the legislative challenges, both platforms have been hit hard by a sharp decline in riders as a result of COVID-19. If a significant number of other states propose similar laws, both companies may have to reshape their respective business models.
Unlike ride-sharing platforms, food delivery service providers have enjoyed a substantial rise in usage due to the pandemic. This upwards trajectory should continue. ResearchAndMarkets.com, a leading market research provider, predicts the global online food delivery services market to reach $154.34 billion in 2023. Illustrating this, Grubhub (which is in the process of being acquired by Amsterdam-based Just Eat Takeaway.com in a $7.3 billion deal) reported that its 2020 revenues reached $1.8 billion, a 39% year-over-year increase from 2019. Doordash is set to announce its 2020 results after market close on February 25th.
Etsy, Inc. (Tii:ETSY)
Unlike other marketplaces such as eBay Inc. (Tii:EBAY), Etsy has taken a different approach to selling products by creating a platform to enable hobbyists to sell their crafted items online. This gig platform boasts nearly 4 million sellers and more than 69 million buyers worldwide. The company reported that revenues rose 128.1% for its third quarter ended September 30, 2020 and plans to release its fourth quarter and year end 2020 results on February 25th.
While it’s uncertain whether the gig economy will continue its rapid growth rate, there will remain a need for contract and freelance workers for the foreseeable future. And as long as that demand remains, companies will utilize technology to create online platforms to fill that need.