Twilio Inc (NYSE: TWLO) shares have gotten hammered of late, dropping 21.8% in the past three months.
One Wall Street analyst said Monday that investors shouldn’t get too hung up on near-term issues and lose sight of the longer-term opportunity in Twilio.
The recent sell-off has pushed Twilio’s year-to-date returns in-line with the Nasdaq, even though Twilio has been a market leader in performance, growing base revenue by 50% year-to-date, Beliov said in a Monday note. (See his track record here.)
Investors have been taking profits in Twilio based on concerns about slowing revenue growth in 2020, the perceived negative impact of robo-calling and a slower-than-expected ramp in Flex, the analyst said.
While revenue growth will naturally slow down as Twilio achieves scale, Flex should provide the foundation for a healthy growth rate in coming years, he said.
Beliov is also bullish on Conversations API, which he estimates will add between $30 million and $90 million to 2021 revenue.
“In our view, TWLO is out-innovating everybody and staying not just one step ahead, but many steps ahead — look at TaskRouter, Flex and now Verify and Conversations.”
The fact that Twilio is approaching $2 billion in revenue and is the clear market leader in a large addressable market makes the recent sell-off in the stock a long-term buying opportunity, according to BofA.
The stock was trading 1.59% higher at $108.25 at the time of publication Monday.
The fact that even after the sell-off Twilio is still trading at 17.1 times sales and 339 times forward earnings means long-term investors will have to weigh the stock’s steep valuation with its long-term growth potential.
While that growth story plays out, it wouldn’t be surprising to see more large swings in the stock like the ones that have occured in 2019.
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Analyst: 'Short Squeeze Is Possible' In Twilio
Analysts React To Heavy Selling Pressure In The Tech Sector
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|Jun 2019||Initiates Coverage On||Buy|
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