I hate to start the new year on a bum note. After all, we had quite a tumultuous ride in 2016, from a reality-TV-star-turned-president to a series of tragic losses in entertainment. You’d have to imagine that 2017 will be less dramatic than last. But don’t expect much comfort for Twilio Inc (NYSE:TWLO) and its legions of early believers.
Twilio currently trades just under $28 per share. While that’s significantly better than its initial public offering price of $15 back in June, that figure is actually 3% lower than where TWLO stock finished after its first day of trading.
Twilio shares had Wall Street in a frenzy for its first few months, touching right under $71 at its peak in late September. Since then, it’s been almost completely downhill.
Problem is, it’s mostly the insiders that are still right-side up in TWLO stock. Everyone else is drowning.
Twilio Stock Has Just Modest Enthusiasm
Some would look at TWLO’s issues with rose-colored glasses. With Twilio stock off some 60% from its peak closing price, you could argue that there’s little froth left. Plus, Twilio isn’t what you would call a fly-by-night operation. As the creator of custom-built cloud communication applications, this tech company is situated in a hot industry, and it’s well-regarded in that industry to boot.
That’s exactly the argument brought forth by Pacific Crest Securities. On Thursday, the investment firm upgraded TWLO stock to “overweight” from “sector weight,” pushing Twilio to a modest 2% gain. Pacific Crest is bullish on the revenue and earnings potential from Twilio’s core cloud software business, as well as “an increasingly favorable risk/reward” balance based on the collapse in TWLO stock.
Only one of these is a legitimate reason for optimism.
With so many iconic names — Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN), Oracle Corporation (NYSE:ORCL), even the venerable International Business Machines Corp. (NYSE:IBM) — crowding their way into the cloud, Twilio stock is in amazing company. And despite the inevitably enormous competition, TWLO is unique enough to carve out a profitable niche.
A long way of saying: Twilio is a legitimate company with real long-term prospects.
The problem remains getting Wall Street to bite again. They bit once — hard — and for now, they’re understandably gun-shy. So while Pacific Crest might see the risk/reward balance as favorable, that’s highly debatable given how Wall Street seems to see things right now.