2023-05-10 07:47:17 ET
Twilio ( NYSE: TWLO ) shares fell more than 16% in pre-market trading on Wednesday after the communications software company reported first-quarter results and weaker-than-expected guidance, prompting Wall Street analysts to understand the continued growth slowdown.
Morgan Stanley analyst Meta Marshall, who has an overweight rating on Twilio ( TWLO ) but lowered the firm's per-share price target to $65 from $82, noted that the platform is "differentiated" than its competitors, but the stock is still paying the price for the company's self-inflicted wounds.
"We continue to believe in the power of the TWLO value proposition, and that a data driven customer organization is going to be more important as AI grows, increasing TWLO's value to customers," Marshall wrote in an investor note.
"We thought the customer win examples TWLO gave in Q1 as highlighting this value proposition," Marshall continued. "However, until they prove this value proposition out with reacceleration of the software business (e.g. Data and Applications), the stock will likely linger absent any activity around the collapsing share structure in late June."
During the quarter, Twilio ( TWLO ) picked up new customers such as Cricket Wireless and a "seven figure" AI company.
William Blair analyst Matt Stotler, who has an outperform rating on Twilio ( TWLO ), was pleased with the first-quarter results and the fact the company raised the low-end of its previous guidance, but there continues to be "significant near-term pressure" on its Communications business, which accounts for 84% of its revenue.
"We continue to believe that Twilio offers differentiated solutions and holds a leadership position in a large and underpenetrated market," Stotler wrote in an investor note.
"While Twilio is navigating numerous internal changes in a tough environment, we believe that the recent restructuring will better position the company for long-term sustainable and profitable growth when the macroeconomic environment normalizes," Stotler added.
More on Twilio
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- Twilio's IoT business unit to be acquired by KORE to build first 'IoT Hyperscaler'
- Intuit, ZoomInfo, Twilio may see impact from SVB fallout, but likely 'transient': analyst
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Twilio stock slumps 16% as analysts digest continued growth slowdown