Twilio announced that it has priced the previously announced public offering of $1 billion worth of unsecured senior notes. The cloud communications platform as a service provider is offering the senior notes in two tranches of different maturities as well as different interest rates.
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Twilio’s (TWLO) notes consist of a $500 million in aggregate principal amount which carries an annualized interest rate of 3.625% and will mature in 2029. Another $500 million of senior notes have an interest rate of 3.875% and will mature in 2031.
Twilio stated that the offering will close on or around March 9. It intends to use the net proceeds for general corporate purposes including, strategic investments, acquisitions, capital expenditures, working capital, debt repayments, and share buybacks. (See Twilio stock analysis on TipRanks)
Last week, Twilio announced partnering with Syniverse, an IP Packet Exchange provider, to boost innovations in the mobile communications space. As part of the deal, the company has agreed to invest up to $750 million cash for a minority stake in Syniverse.
On March 2, Northland Securities analyst Michael Latimore reiterated his Buy rating on the stock and price target of $500 (48.2% upside potential).
In a note to investors, Latimore wrote, “We believe Twilio sees value in Syniverse’s interoperability business in particular. Twilio already connects to Syniverse and pays them fees. Post investment, Twilio will likely migrate more of its traffic to Syniverse, potentially helping gross margins. This investment furthers the value of Twilio’s Super Network.”
Overall, consensus among analysts is a Strong Buy based on 20 Buys and 2 Holds. Following the past year’s 218.2% share rally, the average analyst price target of $511.25 implies further upside potential of about 51.6% to current levels.
On TipRanks’ Smart Score ranking, TWLO gets an 8 out of 10, suggesting that the stock is likely to outperform market expectations.
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