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Will Twilio (TWLO) Pick Up Steam on New Alliances in 2017?
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Twilio Inc.’s (TWLO - Free Report) share price has been in a state of topsy-turvy, since the reported extension of its partnership with Amazon.com (AMZN - Free Report) . The stock surged 15.6% to close at $34.59 on Dec 21, its highest since Nov 25, following the Amazon-partnership news that was reported by Benzinga.
Shares pulled back 8.3% to close at $31.71 the very next day (Dec 22) but rebounded modestly over the next couple of trading sessions. However, the stock plunged 7.4% to close at $30.21 yesterday (Dec 28) reflecting heightened investor pessimism over the company’s ability to outperform market in 2017.
Notably, Twilio raised $150 million from its Initial Public Offering (IPO) on Jun 23 and the shares surged more than 90% on debut. The stock climbed steadily over the next four months to reach an all-time intra-day high of $70.96 on Sep 28, eventually closing a tad-bit lower at $68.97 (up almost 140% since IPO).
However, since then the stock has lost momentum. Further, the company’s secondary stock offering in October impacted share price, which is now down 56.20% from the peak it reached on Sep 28. In comparison, the Zacks Internet Software Industry has declined 12.26% over the same period.
Amazon a Key Partner
San Francisco, CA-based Twilio offers cloud-based software that helps developers make and receive phone calls, text messages and video chats. The company boasts of a strong clientele that include the likes of Netflix (NFLX - Free Report) , salesforce.com and Twitter among others.
However, the long-standing relationship with Amazon is particularly noticeable. Twilio uses Amazon Web Service (AWS) to host its platform. Moreover, Amazon had invested during Twilio’s Series E round funding in 2015.
The recent partnership with Amazon will provide the company a huge exposure to the eCommerce giant’s massive customer base. Per the recently extended partnership, Twilio will now provide voice notifications in addition to SMS messages it used to provide earlier through the Amazon Simple Notification Service (SNS).
Growth Prospects Dim in 2017
Despite a healthy customer base and strong relationship with Amazon, we believe registering growth in 2017 will be hard. Intensifying competition in the communications market and growing prevalence of in-app push notifications are major concerns. Moreover, customer concentration (more than 10% revenues come from WhatsApp) is a headwind.
Further, Twilio is yet to report profits. Full-year 2016 guidance also projects a non-GAAP loss of 23 to 21 cents per share. We believe that unless growth profile improves investors will prefer to remain on sidelines at least in the near term.
We note that FireEye’s current year loss estimates has narrowed down by 31 cents to $2.49 per share in the last 60 days.
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Will Twilio (TWLO) Pick Up Steam on New Alliances in 2017?
Twilio Inc.’s (TWLO - Free Report) share price has been in a state of topsy-turvy, since the reported extension of its partnership with Amazon.com (AMZN - Free Report) . The stock surged 15.6% to close at $34.59 on Dec 21, its highest since Nov 25, following the Amazon-partnership news that was reported by Benzinga.
Shares pulled back 8.3% to close at $31.71 the very next day (Dec 22) but rebounded modestly over the next couple of trading sessions. However, the stock plunged 7.4% to close at $30.21 yesterday (Dec 28) reflecting heightened investor pessimism over the company’s ability to outperform market in 2017.
Notably, Twilio raised $150 million from its Initial Public Offering (IPO) on Jun 23 and the shares surged more than 90% on debut. The stock climbed steadily over the next four months to reach an all-time intra-day high of $70.96 on Sep 28, eventually closing a tad-bit lower at $68.97 (up almost 140% since IPO).
However, since then the stock has lost momentum. Further, the company’s secondary stock offering in October impacted share price, which is now down 56.20% from the peak it reached on Sep 28. In comparison, the Zacks Internet Software Industry has declined 12.26% over the same period.
Amazon a Key Partner
San Francisco, CA-based Twilio offers cloud-based software that helps developers make and receive phone calls, text messages and video chats. The company boasts of a strong clientele that include the likes of Netflix (NFLX - Free Report) , salesforce.com and Twitter among others.
However, the long-standing relationship with Amazon is particularly noticeable. Twilio uses Amazon Web Service (AWS) to host its platform. Moreover, Amazon had invested during Twilio’s Series E round funding in 2015.
The recent partnership with Amazon will provide the company a huge exposure to the eCommerce giant’s massive customer base. Per the recently extended partnership, Twilio will now provide voice notifications in addition to SMS messages it used to provide earlier through the Amazon Simple Notification Service (SNS).
Growth Prospects Dim in 2017
Despite a healthy customer base and strong relationship with Amazon, we believe registering growth in 2017 will be hard. Intensifying competition in the communications market and growing prevalence of in-app push notifications are major concerns. Moreover, customer concentration (more than 10% revenues come from WhatsApp) is a headwind.
TWILIO INC-A Price and Consensus
TWILIO INC-A Price and Consensus | TWILIO INC-A Quote
Further, Twilio is yet to report profits. Full-year 2016 guidance also projects a non-GAAP loss of 23 to 21 cents per share. We believe that unless growth profile improves investors will prefer to remain on sidelines at least in the near term.
Zacks Rank & Key Pick
Twilio has a Zacks Rank #3 (Hold). FireEye sporting a Zacks Rank #1 (Strong Buy) is a better-ranked stock in the same sector. You can see the complete list of today’s Zacks #1 Rank stocks here.
We note that FireEye’s current year loss estimates has narrowed down by 31 cents to $2.49 per share in the last 60 days.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>