Why Twilio Inc. Stock Jumped More Than 30% Today
What happened
Shares of Twilio (NYSE: TWLO) soared as much as 36.5% on Wednesday, following the release of strong third-quarter results. The stock closed today's trading 35.4% above Tuesday's final quote.
So what
The provider of cloud-based communications solutions saw its total revenue rise 68% year over year, landing at $169 million. The analyst consensus had been pointing to roughly $150 million. On the bottom line, Twilio swung from an adjusted net loss of $0.08 per share in the year-ago quarter to $0.07 per share in adjusted earnings this time. Here, the Street would have settled for $0.05 per share.
On top of that, smaller sector peer SendGrid (NYSE: SEND) also crushed Wall Street's estimates in its own second-quarter report. That's good news for Twilio and its investors because Twilio is in the process of acquiring SendGrid for a cool $2 billion.
Image source: Getty Images.
Now what
Twilio investors have now seen their holdings triple in value during 2018. With negative trailing earnings and free cash flows, value investors can't rely on P/E ratios or discounted cash flows to pin a fair value on Twilio's stock yet. That's why it's no surprise to see the stock make a sharp move on this solid report. Twilio's volatility should continue to run high for the foreseeable future.
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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Twilio. The Motley Fool has a disclosure policy.
