According to a recent SEC filing and TipRanks’ insider trading activity tool, Twilio (NYSE:TWLO) CEO Jeff Lawson bought its stock worth $10M. The CEO purchasing shares at a time when the company is focusing on driving profitable growth indicates that better days could be ahead for TWLO shareholders. TWLO stock is up over 3% in today’s pre-market session.
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The move follows TWLO’s strong Q4 performance and a new $1 billion share repurchase program. TWLO delivered better-than-expected Q4 earnings of $0.22 per share. Analysts expected the customer engagement platform provider to report a loss of $0.08 per share. While its solid financial performance could lift TWLO stock in the short term, its focus on driving profitability augurs well for long-term growth.
Mr. Lawson said during the Q4 conference call that Twilio is “migrating from a growth company to a profitable growth company.”
Twilio’s problem is that it has not yet generated consistent profit. However, the company is focusing on scaling its communications business, which is expected to generate a significant chunk of its profits.
Also, it plans to invest in its new software products like Twilio Flex and Twilio Engage to strengthen its margins in the coming quarters. In addition, TWLO announced a 17% reduction in workforce, which will cushion its profitability.
William Blair analyst Matt Stotler believes that TWLO’s focus on driving profitable growth positions it well to navigate the near-term uncertainty in the market. He added that the company is poised to benefit from the “accelerated adoption of its customer engagement software portfolio when conditions improve.” Note that Stotler is bullish about TWLO stock.
Is TWLO a Buy or Sell?
TWLO stock has received 12 Buy, 10 hold, and one Sell recommendations for a Moderate Buy consensus rating. It has gained over 30% year-to-date. Moreover, analysts’ average price target of $83.52 implies a further upside of 30.97% over the next 12 months.
