Should you buy Twilio stock on post earnings weakness?

on Aug 5, 2022
  • Twilio Inc lowers its guidance for the current financial quarter.
  • Stifel analyst says Twilio stock down over 65% YTD is not a 'buy'.
  • Twilio ended Q2 with more than 275K Active Customer Accounts.

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Twilio Inc (NYSE: TWLO) sure is one of the hardest hit tech names this year, but the stock down more than 65% is still “not” a buy, as per a Stifel analyst.

Twilio stock does not have a ‘meaningful’ upside from here

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A day earlier, the cloud company said it now expects to lose up to 43 cents a share this quarter on $965 million to $975 million in revenue. In comparison, analysts had called for $979 million in revenue and only 10 cents of per-share loss.

Consequently, J. Parker Lane downgraded Twilio stock to “hold” and lowered his price target to $90 a share that does not represent a “meaningful” upside from where it’s trading on Friday. In his note, the analyst said:

We believe the near-term picture for TWLO appears less clear, and investor skepticism around the mid/long margin framework is likely to weigh on shares until the company delivers consistent, material improvement.

Recession will make it more difficult for Twilio to recover

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Lane is disappointed in the fact that the NYSE-listed firm continues to see a decline in its organic revenue. It was up 35% YoY in Q1, slipped to 33% in Q2, and is seen declining further to 30% in the current financial quarter.

Lowered guidance, he added, is a signal that the management is still “uncertain” about the time it’ll take to turn profitable, and the looming recession is not going to make it any easier for Twilio stock.

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Such risks overshadowed, for Lane, the market-beating results Twilio reported for its Q2 last night. Also on the bright side were the Active Customer Accounts that topped 275,000 versus 240,000 in the same quarter last year.  


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