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Investing in the ‘gig’ economy


2020 was an interesting year. Horrific bushfires, a pandemic followed by months in lockdown and a recession, just to top it off. But amid all the chaos, the economy staged a remarkable recovery opening up an opportunity for a gig economy to flourish.

Coronavirus brought forward digitisation and working autonomously. This meant employers and employees needed to adapt to a space that was flexible and digitally accessible. This ‘need’ is what has caused a significant increase in the amount of contract, temporary and freelance work and gave rise to an increase in gig platforms.

A gig economy connects clients or customers with workers through an online platform. Thanks to these new platforms, including some of the most well-known delivery and service apps – Uber, Deliveroo, Air-Tasker, Uber eats, Door Dash and Menu Log, a new freelance world is fast upon us.

  • According to Dr. Klaus Schwab, Executive Chairman of the World Economic Forum, “we’re entering the fourth industrial revolution, defined by everything from artificial intelligence, to the Internet of Things, and the transformation of the way that we live and work.” And the gig economy is doing just that. It’s just in its infancy but new technology has paved the way for people to live and work at home autonomously.

    It’s created a way for tasks such as admin, bookings, pay slips, client referrals -just to name a few- to be streamlined for both the employer and employee, online and any time. Because of the consistency and volume of jobs and hours during Coronavirus, independent contracting, casual and temp job types are becoming the norm. Over the last 5 years, most job growth can be attributed to the gig economy and more than just a side hustle.  According to a study done by Upwork, “two million Americans have started freelancing in the past 12 months, and that has increased the proportion of the workforce that performs freelance work to 36%.

    There are a surprising four gig economy companies listed on the ASX despite Australia’s reputation as a technology back water – Freelancer (ASX: FLN), Livehire (ASX: LVH) and newly listed Airtasker (ASX: ART) and Hipages (ASX: HPG).

    Freelancer and Livehire have done exceptionally well over pandemic and lockdown periods. Freelancer returning 170% and Livehire 68.18%. Both had a built working platform that thousands turned to during the pandemic which went into overdrive creating virtual workers. But the coronavirus has also accelerated a major shift to freelancing that’s severing ties between companies and employees.

    Two new entrants have joined the ASX towards the latter stages of the pandemic; Airtasker and Hipages. Both compete in very similar markets connecting residential and commercial consumers with tradies and the like.

    According to Hipages, the Australian Home Improvement spend is $1.9bn (gross merchandise value) of a total $83bn total addressable market. Hipages floated at $2.45, but its shares have gone south ever since, $2.34. Goldman Sachs, however, is a lot more positive on the company’s outlook. It says Hipages has a market leading position and can leverage this to drive growth over the next year. It has a 12-month price target $2.90.

    At the same time, Airtasker generates revenue via fees on both sides of the matching, taken as a percentage of the agreed-upon price. It currently has over 950,000 customers and 150,000 taskers. It posted a 44% increase in revenue growth between FY19 and FY20, with a forecasted 27% growth into FY21. It’s profit is still in the negative, with -$27.2 million in FY19 and -$5.2 million in 2020. Morgans has a Hold recommendation with a target price of $1.23. Shares have doubled from an IPO listing price of 65c to $1.16c. That has Morgans on Hold rating saying the company is attractive with gross margins (over 93%) and a large total addressable market (TAM) in the infancy of e-commerce adoption, but shares are a little pricey.

    As more and more workers move to freelancing out of necessity, and in most cases not by choice, employers have shed millions of permanent, full-time jobs and relocated to smaller office spaces to save money. Freelancing, with all its insecurities is fast become a means to survival. Both companies have built their platform to capture this significant growth and leverage it to not only to grow but to expand their product offering.

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