Cloud-communications firm Twilio (NYSE:TWLO) offered tech-focused investors powerful returns in 2020. Now, it’s just a question of whether to take shares off the table or stay in the trade with TWLO stock.
Even after a banner year, there are reasons to believe that there’s still plenty of room for the stock to run. For one, the onset of the novel coronavirus pandemic has accelerated the demand for Twilio’s software-as-a-service (SaaS) tools.
Yet, Twilio isn’t just resting on its accomplishments from last year or relying on pandemic-driven growth catalysts. If anything, the company is as proactive as ever, as its recent tech-forward investment illustrates.
We’ll certainly delve into the available details of that investment, along with Twilio’s most vital financial facts. To start off, however, here’s an appetizer of technical details pertaining to TWLO stock.
TWLO Stock at a Glance
Let’s rewind to the beginning of 2020, when the TWLO share price was hovering around $103. The novel coronavirus crisis was about to happen, but holding the stock through the turmoil paid off quite handsomely.
Granted, the stock did fall to the $72 level in March of last year. A 30% drawdown is hard to tolerate, but the ensuing turnaround would be swift and relentless.
Believe it or not, by the end of 2020, TWLO stock had catapulted all the way up to $338.50. This really lends credence to the old saying, be right and sit tight.
Now, as of Mar. 9, the stock is trading around $363. So, the bulls haven’t seen much action in 2021 thus far. That could just be the bull run taking a breather, however.
After all, stocks don’t just go straight up — even if the company is doing financially well.
Beating Expectations
And if there’s any cloud SaaS company that’s doing financially well, it’s Twilio. Sometimes, pricey stocks are pricey for a good reason. That includes TWLO stock.
The company’s fourth-quarter 2020 fiscal results prove this point. In fact, these results outdid both the company’s and Wall Street’s expectations.
Let’s take Twilio’s quarterly revenues as an example. For Q4, the company offered guidance in the range of $450 million to $455 million.
Meanwhile, Wall Street analysts were bracing for revenues of $454.8 million. However, the bulls were delighted to learn that Twilio’s actual result was $548.1 million, a whopping 65% improvement over the prior-year period.
Now, let’s turn our attention to Twilio’s non-GAAP net income for Q4. Wall Street was ready for the company to post a loss of eight cents per share. But the reported result wasn’t a loss at all — the company delivered four cents per share.
Clearly, then, the analysts got it wrong while Twilio was getting it right, fiscally speaking.
A Value-Added Investment
So, what is Twilio planning to do with all those revenues?
At the very least, we can account for $750 million since that’s what Twilio reportedly plans to invest in Syniverse, a telecommunications services company. There’s also been talk that Syniverse might go public through a special purpose acquisition company (SPAC).
If you don’t know about Syniverse, these stats from the company’s site should pique your interest:
- 740 billion messages sent per year on the company’s platform
- Seven billion devices reached “in over 200 countries every day”
- More than 30 years of business experience, having been founded in 1987
Syniverse is right to say that it has been “at the center of the mobile ecosystem since the beginning” — and Twilio is right to make a substantial investment in a company with that experience. That can only mean good things for TWLO stock.
The Takeaway
The year is still young, so it’s uncertain whether the TWLO stock bulls can stage a repeat of 2020’s amazing performance.
However, there is strong potential for gains here. And that’s at the very least. Twilio is outperforming Wall Street’s expectations and making an investment that should enhance its overall value. In short, this company is a pricey-but-promising name.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
