As businesses expand onto the cloud, more companies look to cut the cord on costly telecommunication infrastructure. Twilio provides customers with software as a service (SaaS) that integrates communications. Its software makes it easy for developers to create, manage and analyze communications networks on the cloud.
Twilio’s popularity first took hold in Silicon Valley as it brought on customers like Uber, Facebook, Netflix, Salesforce and Twitter. It has since expanded to major companies like Home Depot and Nordstrom.
In the last five years alone, a $10,000 investment would have gained 59.31%, bubbling to $15,931.
Twilio at a Glance
Founded in 2008 by Jeff Lawson, Evan Cooke, and John Wolthuis, Twilio was one of the first platforms that allowed businesses to program communications through the cloud. Providing an API for developers, companies could leverage their own programmers to create secure communications over the web. Its software makes it easy for businesses to create custom communication networks from voice and video to messaging while maintaining security.
Since 2013, the company increased revenues from $50 million to $493 million in the last 12 months. Gross margins increased from 48.2% to 53.2% during that same time period.
History of Twilo Stock
Twilio (TWLO) debuted on the NYSE in 2016. With an initial price of $15 per share, the stock closed its first day of trading up to $28.53, an increase of 90%. If you had purchased $1,000 of Twilio stock in 2016 at the $15 IPO price, you would have ended the first day of trading with $1,900. By September 2018, your shares would have hit $87.50, making your investment worth $5,833.
Two-thirds of Twilio’s stock is owned by institutions; Vanguard is the largest at $454.6 million. In line with the company’s quarterly reports, the stock saw institutions divest from the company this quarter to almost the exact amount it invested in the previous quarter.
Why Purchase Twilio Stock?
Pros of purchasing Twilio stock:
- Revenues have grown at double digits each year and nearly 10x since 2013.
- Gross margins expanded from 48.2% in 2013 to a current 53.2%.
- The company maintains a global presence with 26 data centers in eight regions.
- Twilio supports a strong corporate culture through 9 values which range from empowering others to being frugal.
Cons of purchasing Twilio stock:
- Twilio’s operating cash flow wavers from positive to negative each year.
- The company hasn’t had a single year of positive earnings.
- Net income has declined every year.
- Twilio works with a few large customers; its top 10 customers account for 19% of 2017 revenue.
How to Purchase Twilio
Twilio is listed and traded on the NYSE. The company’s stock is available for purchase through all major brokerage firms that trade in securities. Some basic ideas on how to acquire the stock are as follows:
- Choose how much to invest.
Unlike established tech companies such as Oracle or IBM, Twilio has only been around a few years. Consider the relative risk of Twilio to other technology companies when you decide how much you want to invest.
- Select a stockbroker.
Take some time to research the costs of trading and the ease of navigation on each broker’s website.
- Purchase shares of Twilio.
Once you’ve chosen a broker, follow the instructions to place a buy order for Twilio’s stock. Most brokers offer online and support over the phone if you need help placing a trade.
Best Online Brokers
For more information about buying stock, check out Benzinga’s Best Online Brokerage.
Future Outlook for Twilio’s Stock
Investors currently worry about two issues. First, Twilio’s gross margins declined during the past year. Second, the stock has run extremely far without solid earnings and cash flow. Though investors will give a new company some leeway to grow, if Twilio doesn’t begin to turn profits soon, shares could see a rapid decline.
You can get more insights into Twilio’s outlook from Benzinga’s 4 Reasons Why DA Davidson Is Bullish On Twilio.
Final Thoughts on Twilio
Though Twilio has a large customer concentration, Uber’s move to in-app programs will hurt Twilio’s revenues. The space for enterprise communications is highly competitive, and Twilio faces large players, including Cisco and Avaya. The company keeps a strong current ratio of 7.2x, but its balance sheet only holds $884 million in current assets. Also, though unique, Twilio’s products can easily be replicated over time by competitors.