Twilio (NYSE:TWLO) Stock Tanks on Weak Q4 Outlook

Shares of Twilio (NYSE: TWLO) have lost more than 21% in the extended trading hours yesterday on a muted Q4 outlook, despite the company reporting better-than-expected Q3 results.

The adjusted loss of $0.27 per share was superior to analysts’ estimated loss of $0.39 per share. However, it was much worse compared to earnings of $0.01 per share in the prior-year period.

Further, revenues jumped 32.8% year-over-year to $983 million and exceeded consensus estimates by $974 million.   

The company added about 5,000 active customer accounts during the quarter, with more than 280,000 active customer accounts compared to around 250,000 active customer accounts at the end of the prior-year period.

Disappointing Q4 Outlook

Based on Q3 results, management provided a muted guidance range for Q4. Total revenue is expected to range between $995 – $1,005 million, which is lower than the consensus estimate of $1.1 billion. Q4 adjusted loss is expected to range between $0.06-$0.11 per share, versus a consensus loss of $0.11 per share.

Sharing his views on short-term challenges, Twilio’s CEO Jeff Lawson commented, “Like many companies, we are facing some short-term headwinds, but the long-term opportunity remains strong as companies continue building their customer engagement strategies, become more efficient, and aim to build better and more personalized relationships with their customers.”

Is TWLO a Buy or Sell?

As per TipRanks, analysts are cautiously optimistic about the stock and have a Moderate Buy consensus rating, based on 16 Buys, seven Holds, and one Sell. Twilio’s average price forecast of $118.80 implies 81.76% upside potential.

Following Q3 results and weak guidance, Patrick Walravens from JMP Securities lowered the price target on Twilio Stock from $175 to $110 (68.3% upside potential) while reiterating a Buy rating.

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