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Twilio Inc. (TWLO) has seen positive growth in recent months after a slow start to 2020, with hedge funds actively buying the stock. Twilio has consistently outperformed the S&P 500’s performance this year, with the shares nearly tripling compared to the S&P’s gain of about 8.7%.

Twilio develops and publishes internet infrastructure solutions, offering a cloud communications platform, communications software, and services. The company has not been impacted by the coronavirus pandemic. The pandemic has highlighted a need for easier and faster digital-based access to information and data across multiple industries such as health care and education, bringing Twilio an opportunity.

Hedge Funds Are Buying

Twilio saw an increase in its aggregate share value by looking at second-quarter activity by the top hedge funds. Aggregate 13F shares held rose to about 31.9 million from 31 million, an increase of approximately 2.7%. Of the hedge funds, 61 created new positions, 34 added to existing holdings, 23 exited, and 63 reduced their stakes. In slight contrast to hedge funds, institutions were selling. Overall, institutions decreased their aggregate holdings by about 1% to approximately 120.5 million from 121.7 million. Despite encouraging performance this year, the cloud communications company slid on the WhaleWisdom Heatmap to a ranking of 38 from 19.

(Whale Wisdom)

Mixed Multi-Year Estimates

Analysts project that earnings will decline by about 22.5% and 22.8% in 2020 and 2021, respectively. Fortunately, analysts expect a turn for the better by 2022. It is anticipated that the company will see a stunning surge in year over year growth, bringing earnings per share to $0.53 from $0.12 in 2020. Earnings are expected to continue to increase by December 2023 to $1.09 per share.

Revenue estimates are more favorable for Twilio, with continuous year-over-year growth predicted from 2020 through to 2023, bringing revenue from approximately $1.67 billion in 2020 to about $4 billion in 2023.


Acquisition Brings Optimism

A recent $3.2 billion stock deal has caught the attention of analysts. Twilio recently finalized its acquisition of customer data platform Segment, which should be a complementary addition to aid Twilio in providing its customers with valuable data, improving communication between businesses and their customers, and increasing the overall customer experience. Segment will become a division of Twilio. While third quarter results dipped into the red, there seems to be optimism for the fourth quarter earnings. Active customer accounts were up approximately 21% year over year at the end of the third quarter. The consensus from analysts is that Twilio will see approximately $432.1 million in revenue in the fourth quarter and a $0.01 loss per share.

Opportunity Ahead

While lower 2020 and 2021 earnings estimates may cause some investors to sell or reduce interest in the stock, patient investors may see it worthwhile to stay. Twilio’s upward momentum in 2020, in comparison to the S&P 500, has been impressive. Multi-year estimates from analysts and the positive impact of Twilio’s recent acquisition offer growth opportunities for the company.

This entry was posted on Monday, November 9th, 2020 at 8:52 am and is filed under Hedge Fund News, Stock. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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