Boosting Twilio to Overweight from Neutral, analyst Mark Murphy takes note of “seven under-appreciated aspects of the business.” Among them are valuation after a 60% decline in the stock price since late September. Others include a strong competitive position, good relationship with Amazon, and very large addressable market.
Murphy’s price target of $36 suggests more than 25% upside.
I have not seen the full report, but one aspect of note is that the analyst indicates that there is a large volume of potential customers coming to Twilio after their existing vendors failed to have sufficient uptime quality of service. This is the exact reason Uber switched to Twilio to begin with. It is also a continuing advantage of Twilio, as Twilio expands and consolidates and improves its network. Already and this is undisputed I think by anyone speaking honestly, the most reliable network, will just get better.
It becomes a matter of whether or not a competitor can get reliable enough, so that at some point you only need so much reliability or not, or if this will always remain a differentiating feature of TWLO.
As I specified on New Paradigm, if TWLO has long term sustainable advantage, the current valuation is cheap. If it does not, well, it will be on elf those investments that did not work out. Makes for a good point to review it for long-term considerations.