Is Twilio a Good Investment?

PHOTO CREDIT: Twilio

OVERVIEW

Twilio Incorporation is one of the largest providers of cloud based communication services. It allows its consumers to allow communication within their applications. The company was founded in 2008 and is based in the United States. It offers its cloud-based communication services to customers around the world.

Why You Should?

1. The COVID-19 Pandemic has boosted the sales of Twilio’s services as companies around the world look for better ways to communicate with their customers online. This is one of the reasons why Twilio has reported great numbers during this stretch of time.
2. Companies like Uber and Facebook use Twilio’s services for communication services within their apps. They also offer similar services for many other companies. This strong business from other companies who are unlikely to cancel their accounts any time soon will benefit the company’s future growth as they offer consistent revenues for the company.
3. Twilio is part of a rapidly growing industry. This cloud communications industry will be worth hundreds of billions of dollars as companies like Uber and Facebook see demand spike for their communication services. This means that Twilio is a great long-term investment and will see revenues and profits rise in the future.
4. Twilio has seen rising revenues due to the reasons mentioned above. This will help the company build a stronger balance sheet and help them grow in the future. The company looks for these numbers to grow over the next couple of financial years. In the financial year of 2019, the company reported revenues of around 1.13 billion. In the financial year of 2018, the company reported lower revenues at around 650 million.

PHOTO CREDIT: Yahoo Finance

Why You Should Not?

1. Twilio’s stock currently trades at over 300 dollars as investors pile into this company’s future growth expectations. When a company is overvalued, it means that the company is more susceptible to volatility. I would wait for the stock price to fall significantly before investing in this company.
2. Twilio faces tough competition from other cloud companies that are looking to expand in the cloud-based communications platform. Companies like Amazon, Google, Fastly, and many others are looking to expand into this industry as well, which might hurt Twilio in the future.
3. Twilio has never reported a profit in its history. Though the company looks to turn this around, it still proves the point that the company is overvalued. Until the company reports consistent profits, I will wait for the stock price to fall further. The company has seen losses rise over the past couple of financial years. In the financial year of 2019, the company reported a loss at 307 million, much higher than what the company reported in the previous financial year at around 122 million.

PHOTO CREDIT: Yahoo Finance

MY OPINION

In my opinion, I think that Twilio is a great long-term investment due to their position is a rapidly growing industry, the positive impacts of the COVID-19 Pandemic for the company, the business from large enterprise customers, and rising revenues. However, an overvalued stock, competition, and wider losses might hurt both the company and its investors.