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I last wrote about Twilio (TWLO - Free Report) as the Bear of the Day on February 24 as I noted the "cloud darling for intelligent corporate comms has a bright future, but a temporary squall on EPS growth." That dual trend persists.
Shares were trading above $400 only a few days after their Q4 FY20 report, but I don't think the downward analyst estimate revisions that made it a Zacks #5 Rank Strong Sell really sunk in yet. The ongoing Nasdaq correction took TWLO down to $311 by March 5.
Here's what I wrote in late February that will help explain these trends...
TWLO is an exciting SaaS company that has more than quadrupled in the past year from a $15 billion provider of advanced corporate cloud communications to a $60B enterprise serving the top names in the Fortune 1000.
Twilio’s innovative Programmable Communications Cloud software allows developers to embed voice, messaging, video and authentication capabilities into any corporate "comms" platform. Plus, their API allows software developers to programmatically channel all these functions automatically for real-time customer engagement.
Twilio delivered better-than-anticipated fourth-quarter 2020 results last week as the company posted non-GAAP earnings of 4 cents per share for the quarter, while the Zacks Consensus Estimate was pegged at a loss of 8 cents. The non-GAAP bottom-line figure is flat, year on year.
Twilio’s quarterly revenues surged 65% year over year to $548.1 million, massively surpassing the Zacks Consensus Estimate of $454.6 million on an increase in clientele and the adoption of their Segment platform. The growing adoption of Twilio Flex is also a tailwind.
Twilio is benefiting from the accelerated digital-transformation across many industries, owing to the remote-working wave amid the COVID-19 pandemic. Organizations are reconfiguring their set-ups for a work-from-home operational environment and making "e-business" and "e-work" nearly majority realities.
So why, with the company on track to 30% growth and $3 billion in sales next year -- thus trading at only 20X sales in an overheated software market full of 40X sales wind-bags -- is TWLO in the cellar of the Zacks Rank?
The simple answer is always the same: because Wall Street analysts have lowered their growth forecasts in the medium term.
(end of excerpt from my 2/24 article on TWLO)
While analyst EPS estimates kept dropping in March, they just took another turn south after the company's Q2 report on May 5.
And that quarterly update was digested with a stock price plunge from $335 to $275 by the second week of May.
In just the past two weeks since the company report, the analyst consensus for TWLO EPS growth for 2021 has dropped from a loss of 13-cents per share to -19 cents.
That represents a turn of fortune from profitability in 2020 to a minus 180% annual loss.
As I wrote in Feb, "While average analyst price targets moved up to north of $500, the stock is probably due for a pause as earnings momentum decelerates."
So where are we now? TWLO remains a powerful player in a small-but-growing niche and their projected 43% revenue growth to top $2.5 billion this year verifies this.
Buying under $300 for the long term would seem to make some sense as it still trades under 20X next year's projected topline of $3.25 billion, representing 30% growth.
There will be a time to add and really ride the Twilio flying machine higher, and the Zacks Rank will let you know.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
Image: Shutterstock
Bear of the Day: Twilio (TWLO)
I last wrote about Twilio (TWLO - Free Report) as the Bear of the Day on February 24 as I noted the "cloud darling for intelligent corporate comms has a bright future, but a temporary squall on EPS growth." That dual trend persists.
Shares were trading above $400 only a few days after their Q4 FY20 report, but I don't think the downward analyst estimate revisions that made it a Zacks #5 Rank Strong Sell really sunk in yet. The ongoing Nasdaq correction took TWLO down to $311 by March 5.
Here's what I wrote in late February that will help explain these trends...
TWLO is an exciting SaaS company that has more than quadrupled in the past year from a $15 billion provider of advanced corporate cloud communications to a $60B enterprise serving the top names in the Fortune 1000.
Twilio’s innovative Programmable Communications Cloud software allows developers to embed voice, messaging, video and authentication capabilities into any corporate "comms" platform. Plus, their API allows software developers to programmatically channel all these functions automatically for real-time customer engagement.
Twilio delivered better-than-anticipated fourth-quarter 2020 results last week as the company posted non-GAAP earnings of 4 cents per share for the quarter, while the Zacks Consensus Estimate was pegged at a loss of 8 cents. The non-GAAP bottom-line figure is flat, year on year.
Twilio’s quarterly revenues surged 65% year over year to $548.1 million, massively surpassing the Zacks Consensus Estimate of $454.6 million on an increase in clientele and the adoption of their Segment platform. The growing adoption of Twilio Flex is also a tailwind.
Twilio is benefiting from the accelerated digital-transformation across many industries, owing to the remote-working wave amid the COVID-19 pandemic. Organizations are reconfiguring their set-ups for a work-from-home operational environment and making "e-business" and "e-work" nearly majority realities.
So why, with the company on track to 30% growth and $3 billion in sales next year -- thus trading at only 20X sales in an overheated software market full of 40X sales wind-bags -- is TWLO in the cellar of the Zacks Rank?
The simple answer is always the same: because Wall Street analysts have lowered their growth forecasts in the medium term.
(end of excerpt from my 2/24 article on TWLO)
While analyst EPS estimates kept dropping in March, they just took another turn south after the company's Q2 report on May 5.
And that quarterly update was digested with a stock price plunge from $335 to $275 by the second week of May.
In just the past two weeks since the company report, the analyst consensus for TWLO EPS growth for 2021 has dropped from a loss of 13-cents per share to -19 cents.
That represents a turn of fortune from profitability in 2020 to a minus 180% annual loss.
As I wrote in Feb, "While average analyst price targets moved up to north of $500, the stock is probably due for a pause as earnings momentum decelerates."
So where are we now? TWLO remains a powerful player in a small-but-growing niche and their projected 43% revenue growth to top $2.5 billion this year verifies this.
Buying under $300 for the long term would seem to make some sense as it still trades under 20X next year's projected topline of $3.25 billion, representing 30% growth.
There will be a time to add and really ride the Twilio flying machine higher, and the Zacks Rank will let you know.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>