Twilio (TWLO) stock forecast: Is it time to buy the dip?
It’s been a tough year for investors in Twilio. The cloud communications platform was a beneficiary of Covid-19 lockdowns in 2020, but its stock price has fallen over the past year.
A combination of investors’ concerns over its post-pandemic growth potential and the general lack of enthusiasm for growth stocks has weighed on the company.
What’s next? Will Twilio stock recover? Can investors look forward to a more lucrative 2022 or should they expect the price to fall further over the coming months?
Our TWLO stock forecast examines the US-based company's recent results, outlines its growing business case and garners the opinions of analysts.
Twilio stock analysis: TWLO shares enjoyed Covid boom
Twilio is a prominent name in the world of business communications. It enables phones, VoIP and messaging to be embedded into web, desktop and mobile software.
The company, which has 26 offices in 17 countries, has said of its success in making communications a part of every software developer’s toolkit:
“Twilio is enabling innovators across every industry – from emerging leaders to the world’s largest organisations – to reinvent how companies engage with their customers.”
Twilio stock value boomed two years ago as Covid-19 struck and investors put their faith – and money – into companies involved in remote working.
As a result, Twilio’s share price soared 356% in nine months, going from $79.99 in March 2020 to $365 by the middle of December.
Is the company’s star fading now?
However, 2021 proved more challenging. The price, which began the year around the $329 mark, rose above $440 at one stage before slipping to end the year at $259.
The stock has lost 56% of its value over the past 12 months. it’s down 27% year-to-date, from $263.20 at the start of January 2022 to $190.88 by close on 11 February 2022.
According to Twillio stock technical analysis, the latest downtrend has led to a break below the 200-day simple moving average and pushed momentum oscillators to their lowest levels in months.
Momentum indicators have been bearish, as of 14 February. The relative strength index (RSI) has been heavily depressed at 29, while the moving average convergence divergence (MACD) remained in negative territory and below the signal line.
Twilio shares dip amid strong earnings
The most recent share price falls this year, which are largely being attributed to a broader growth stock selloff, come despite the company’s strong recent results.
In a statement released in early February 2022, Twilio announced revenue of $842.7m for the fourth quarter of 2021, which was up 54% year-over-year.
This included $57.4m from Twilio Segment, the customer data platform it announced that it was buying for $3.1bn in October 2020.
The figures also included $31.8m from Zipwhip, the North American business texting platform it bought for $850m in May 2021.
It also reported a GAAP loss from operations of $283.6m for the final quarter of 2021, compared with a $185.3m loss for the corresponding quarter of 2020.
Twilio full-year figures
Twilio reported revenue of $2.84bn for full year 2021, up 61% year-over-year. The figure included $200.9m from Twilio Segment and $55.4m from Zipwhip.
It reported a 35,000 increase in the number of active customer accounts to 256,000 at the end of 2021, up from 221,000 a year earlier.
Jeff Lawson, Twilio’s co-founder and chief executive, said the fourth quarter capped off “an amazing year of results” for the company.
Twilio stock news: Launch of Twilio ventures
In early December 2021, the company announced the launch of Twilio Ventures and its new $50m fund designed to champion the next generation of customer engagement businesses.
The aim is to back early stage companies and investment in large stage firms “at the intersection” of customer engagement and developers.
Its stated preference is for companies that build tools for developers focused on customer engagement, including commerce and content management.
Twilio Ventures is, in addition to its existing Impact Fund, supporting non-profit and social enterprises “accelerating social impact” through innovative communications and engagement technologies.
The Impact Fund focuses on platforms and strategies that make it easier, faster and more affordable for organisations to connect with the people they serve.
Twilio stock projections: What’s next for Twilio?
What could investors expect from Twilio over the coming year? Khozema Shipchandler, the company’s COO, outlined the Twilio earnings prediction during the announcement of fourth quarter results.
He said that first quarter revenue was expected to come in at $855m to $865m, representing year-over-year growth of between 45% and 47%.
“Growth remains our top priority as we address the massive customer engagement opportunity ahead,” he said. “While our focus on growth has not changed, we also believe we can create economies of scale.”
Twilio stock price prediction: Analyst sentiment
Danni Hewson, financial analyst at AJ Bell, acknowledged that the TWLO stock price has dropped significantly this year, but doesn’t lay the blame at the company’s feet.
However, Hewson highlighted the company’s bullish outlook as a reason why investors were enthusiastic about its future predictions.
Hewson has also been impressed with the quality of the names turning to Twilio to solve their communications issues. She cited Vertu Motors and Stripe as two prime examples.
“What the business provides is only becoming more relevant in our hyper connected world,” she said. “As firms kick operations up a notch after their Covid stupors, communication and privacy tools are becoming more important and customers will be prepared to pay to get those things right.”
Finally, Hewson credited Twilio for its success in making engagement with customers simple and effective across the various communication channels that people use every day.
Twilio (TWLO) stock forecast: Targets for 2022, 2025 and 2027
Is Twilio stock a buy, sell or hold? According to Twilio share price forecast from Wallet Investor (as of 14 February), the stock was a “good long-term (one year) investment” that could rise 11% to $212.50 over the next 12 months from its last closing price of $190.88.
The site expected the Twilio future stock price to close 2022 at $198.61 and reach $236.71 by the end of 2025. Although the service did not provide targets for 2030, its five years’ Twilio stock forecast suggested the price could hit $257.77 in February 2027.
Sentiment for the stock was bullish, according to the views of 26 Wall Street analysts compiled by MarketBeat (as of 14 February). They unanimously rated the stock a ‘buy’.
According to their consensus Twilio stock price target, the price could more than double to $391.31 over the coming year. The most optimistic analysts said it may hit $550, while the most pessimistic suggested a more modest rise to $240.
Among the recent analyst commentaries, Canaccord Genuity and Goldman Sachs lowered their price targets for Twilio to $455 and $300, respectively, reiterating ‘buy’ ratings.
When looking for Twilio stock predictions, it’s important to bear in mind that analysts’ forecasts and algorithm-based price targets can be wrong. Predictions are based on making fundamental and technical studies of the TWLO stock historical price pattern. Past performance does not guarantee future results.
It is important to do your own research and always remember your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. You should never invest funds that you cannot afford to lose.
FAQs
Is Twilio stock a good investment?
Whether TWLO stock is a suitable investment for you will depend on your opinion of the company and your personal investment objectives. You will also need to research the stock and use this information to decide whether it meets your needs.
How high can Twilio stock go?
No-one knows for sure and analyst predictions can always be wrong. However, their consensus view as of 14 February was that the stock price could more than double to $391.31 over the coming year, as data from MarketBeat showed.
Why has the Twilio stock price been going down?
The price soared in 2020 as investors piled into companies that were expected to benefit from the Covid-19-triggered push to remote working. However, the stock has fallen since due to concerns over Twilio’s growth prospects in the wake of the pandemic and a lack of enthusiasm for growth stocks.
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