Worst Tech Stocks to Buy: Twilio (TWLO)
Twilio Inc (NYSE:TWLO) was actually a tech darling until recently.
Back in early 2008, the company launched a cloud service that made it easy for companies to add communications services to their mobile apps, and breakneck growth followed.
However, during the past year or so, things have become considerably more difficult. The competitive environment has become more intense, including Cisco Systems, Inc. (NASDAQ:CSCO), Vonage Holdings Corp.’s (NYSE:VG) Nexmo, CallFire and Bandwidth.com. Perhaps the most threatening competitor, though, is Amazon, which has launched its own suite of communications cloud services.
Another big-time problem? Twilio has serious customer concentration; Uber accounts for about 12% of revenues, while Facebook’s portion is roughly 9%. And Uber has been reducing expenditures; during Q4, Uber was actually 17% of revenues. If this trend continues — and the way Uber is going, it appears that will be the case — TWLO will have a hard time maintaining strength on the top line.
Despite all this trouble, Twilio shares still fetch a too-lofty valuation of about 9 times sales.