Is Twilio a buy?

This week saw a massive dip in the stock market, but Twilio fared well. This high-growth company delivering cloud-based communications rose almost 8% yesterday. The company’s 65% year-on-year growth begs the question, is Twilio a buy?

The stock market crashed yesterday due to a mix of economic uncertainty around vaccine rollout and announcement of jobless claims in the US. .Amid the sea of red on Wall Street, Twilio climbed higher. The cloud-based communications specialist reported fourth-quarter financial results that confirm the stock is growing fast.

Twilio, Inc. (TWLO) engages in the development of communications software, cloud-based platform, and services. Revenue for the fourth quarter jumped 65% year-on-year, capping a year of 55% top-line growth for the company. Dollar-based net expansion rates of 139% for the fourth quarter and 137% for 2020 demonstrates customers are feeding more and more back into the business. The company now has over  221,000 active customer accounts, up 42,000 from a year ago.

Twilio also expects the good times to continue. It projected guidance for first-quarter sales to grow between 44% and 47%. That might seem like a slowdown, but Twilio has historically been quite conservative in its guidance.

Chart from money CNN

Twilio expects their high growth to continue with projections of Q1 sales up 44 – 47%. Considering Twilio have a history of estimating conservatively, this target will be easily achieved. As developers implement new operational standards, Twilio makes their life easier. More than 10 million developers around the world are using Twilio’s library of software to embed new means of communication within applications. Twilio’s popularity was proven with a 65% increase in revenue year-on-year (December 2020) equating to $548 million.

“Twilio’s 65% year-over-year total revenue growth in the fourth quarter continued the strength and momentum we saw throughout an outstanding year of results in which we delivered $1.76 billion in revenue,”

– CEO Jeff Lawson

“These results reinforced that we are addressing a generational opportunity, and with our acquisition of Segment and strong traction with Flex, we are building the leading customer engagement platform to improve every interaction that businesses have with their customers.”

– CEO Jeff Lawson

The Covid-19 disruption has helped Twilio grow in new areas, including telehealth and online education. Whereas, its pandemic-hit dining and ride-sharing markets are only just starting to improve. A diversified customer base has helped Twilio during the pandemic, investing more in back-office processes, sales and marketing to target new opportunities.

Last year, Twilio announced they would acquire Segment, costing $3.2 billion in stock. The move to add a customer data business will set Twilio ahead of other competing platforms. Although new integrated products are yet to be announced.

Before you invest in Twilio, you will need to open an account with a broker to manage your investments. 

Choosing the best online stock broker can make the difference from an easy and exciting new experience to  constant frustration and disappointment. Accessing financial markets through online brokers is easy and inexpensive but there are so many out there tailored to a different sort of customer so choose the right broker that will optimise your user experience and profits. 

If you’re just starting out we recommend eToro and easyMarkets for their easy to use interfaces and fee – free trading.

Should I buy or sell Twilio?

Overall, Twilio’s strong performance and high growth potential means it is a BUY. 

Chart from money CNN

Technicals show us the stock is well worth investing in with a relative strength line that has risen to record highs. A rising RS line means TWLO stock is outperforming the S&P 500 index.Overall, Twilio rates highly on both key fundamental and technical metrics. 

Price Forecast

Outlook for the first quarter sees a revenue of $526 – $536 million, well above the $487.2 million in sales analysts predicted. The median estimate after 12-months is a staggering 18.9%. But once Q1 performance is released, we can expect a positive adjustment. 

Chart from Money CNN

Twilio’s strong performance and high growth potential proves it is a strong buy. Want to start investing? We recommend eToro and easyMarkets for beginners. 

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