Cramer reacts to activist investor pushing for changes at Twilio

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Written on May 31, 2023

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Activist investor Legion Partners wants Twilio to make board changes.
Jim Cramer discussed the news on CNBC's "Squawk on the Street".
Twilio stock is currently up more than 35% versus the start of 2023.

Twilio Inc (NYSE: TWLO) is up nearly 10% this morning following a report that an activist investor is pushing for changes at the cloud company.

Here’s what Legion Partners want

On Wednesday, “The Information” cited anonymous sources and said Legion Partners has met with Twilio at least six times in recent months.

It wants the software company to make changes to the board and consider strategic alternatives, including divestitures to cut costs, the publication added. Reacting to the news, famed investor Jim Cramer said:

It doesn’t matter that he [CEO Jeff Lawson] has had two RIFs, a billion-dollar buyback. It doesn’t matter they put real profitability targets. These guys are just not satisfied. What more can you do.

It is also noteworthy that the use of supervoting shares that granted a near 22% voting stake to CEO Lawson is set to expire in June.

Twilio issued weak guidance for its Q2

Earlier this month, Twilio Inc issued disappointing guidance for its current financial quarter.

The California-based company expects up to $990 million in revenue in Q2. In comparison, analysts were at $1.05 billion. Still, Cramer said on CNBC’s “Squawk on the Street”:

They deal with small and medium businesses. They’re not doing well because of the Fed and the cycle. This is more cyclical than we realised. CEO Lawson is trying hard and I think he is innocent.

In March, the chief executive bought $10 million worth of Twilio stock as Invezz reported here. The CPaaS firm is yet to respond to today’s report.