Twilio stock experiences sharp decline

Last Updated: 16. Februar 2024By

Twilio stock experienced a sharp decline yesterday. Right from the start of trading, the shares of the US technology company dropped 13% to below $63. This puts the stock at a 17% loss since the beginning of the year, significantly lagging behind the Nasdaq index (+5.46% in 2024). From its peak in February 2021, when the stock changed hands for $443, the shares are now 86% lower.

Twilio – from niche player to growth star Twilio was founded in 2007 and is headquartered in San Francisco. The company is led by co-founder and software specialist Jeff Lawson. Twilio offers a cloud-based communication platform as a service and is therefore active in the so-called platform-as-a-service business. With its software solutions, Twilio targets not companies directly, but rather software developers.

Developers can use Twilio and its programming interface to directly integrate communication services into mobile applications (apps), without having to build such a service themselves. Twilio is thus practically the backbone of the communication function in many apps that ultimately enable customers to easily and quickly contact the company (customer service, etc.) via messaging.

Everyone uses it and no one knows it Twilio makes a phone call or sending an SMS available as a software component in the cloud. But these are only the most basic functionalities that Twilio offers with its communication platform. In the meantime, many other communication channels, such as video, chat, or social media, are also available in the Twilio product portfolio. Even if most of you are probably not aware of it, you have probably all used Twilio’s technology at some point.

Twilio customers include WhatsApp, Uber, PayPal, Airbnb, Netflix, ING Bank, and many more. In the meantime, over 306,000 customers use Twilio’s web-based communication platform.

Twilio with high growth in the past With its products, Twilio helps corporate clients streamline their business processes. The success is reflected in strong business development. Since 2013, revenues have skyrocketed from $49.9 million to $4.15 billion in 2023. However, the company is still deep in the red. In 2023, Twilio had to report a loss of $1.015 billion.

Growth slowdown in the final quarter Recently, however, the growth momentum has slowed down rapidly, causing increasing concerns among investors. In the final quarter, revenues only increased by 5.9% to $1.03 billion. This was significantly below the growth rates of the previous quarters (Q3 2023: +5%; Q2 2023: +10%; Q1 2023: +15%) and $40 million below the expectations of Wall Street analysts.

At the same time, Twilio remained deep in the red. The company posted a loss of $365.40 million in its books, more than in the final quarter of the previous year (-$229.42 million).

Weak forecast for the first quarter For the current quarter, Twilio CEO Jeff Lawson is also cautious. The manager expects company revenues between $1.025 and $1.035 billion, which corresponds to an increase in revenue of 2 to 3%. The operating result (non-GAAP) is expected to be between $120 and $130 million.

Conclusion: The business figures and the cautious forecast for the first quarter have caused investors to hit the sell button on Twilio stock for the time being. The price development is drastic and shows how significant the mood change can be for individual technology stocks. In spring 2021, the market value was still around $75 billion. Currently, Twilio is only valued at $11.3 billion. It seems that investors are currently doubting that this can necessarily be translated into price potential.