Shares of customer engagement platform provider Twilio (NYSE:TWLO) plunged about 43% last week following the company’s Q4 outlook amid a weak macro backdrop.
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Twilio delivered better-than-expected Q3 performance, wherein its revenues of $983 million increased by 33% year-over-year. Meanwhile, its adjusted net loss of $0.27 per share fared better than the Street’s expectations of a loss of $0.39 per share. Learn more about TWLO’s financials here.
Twilio’s COO, Khozema Shipchandler, stated, “While we delivered solid results in Q3, we’re mindful of the evolving macro environment.” He added, “we started to see a broader impact from the macro environment on our business throughout the quarter.”
Twilio expects Q4 revenues to mark an increase of 18%-19% year-over-year, much below its target revenue growth rate of 30%. Further, for the full year, TWLO expects the top line to increase by approximately 29%.
Shipchandler said, “I recognize that this is below the 30% revenue target we laid out two years ago, but we’re also facing a very different and rapidly evolving external environment today.”
In response to the Q3 results and Q4 outlook, Monness analyst Brian White said, “Twilio was a major beneficiary of the COVID-19 crisis, driving investor excitement to new heights and the stock price to an all-time high in early 2021; however, the stock has since collapsed and Twilio remains profit challenged. At the same time, we believe the darkest days of this downturn are ahead of us.”
The analyst has a Hold recommendation on Twilio stock.
What is TWLO’s Stock Price Prediction?
On TipRanks, TWLO stock has a Moderate Buy consensus rating based on 13 Buy, nine Hold, and one Sell recommendations. Moreover, due to the pullback, Twilio stock’s average price target of $89.85 implies 110.2% upside potential.
Bottom Line
The correction in TWLO stock and the significant upside potential make it attractive at current levels. However, short-term macro headwinds will likely play spoilsport and limit the recovery in TWLO stock.
