What AWS Pinpoint Means For Vonage And Twilio

Unperturbed by the news that Amazon.com, Inc. AMZN's AWS added a two-way SMS capability to its Pinpoint product, which triggered a 7 percent decline in Twilio Inc TWLO shares and a 2 percent drop in Vonage Holdings Corp. VG shares on Tuesday, Needham reiterated its Buy rating and $9.50 price target for the shares of Vonage.

At publication, Vonage shares were rallying 4.75 percent at $8.27, Twilio was soaring 6.98 percent to $29.44 and Amazon shares were up 1 percent at $948.

Analysts Richard Valera and Jordan Zelin noted that the new feature is narrowly focused on enabling user engagement campaigns for app developers and not a general purpose SMS/voice API, such as offered by Vonage. Going by Nexmo's previous collaborations with AWS, the analysts surmised that Vonage might be providing the back-end for the service.

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Needham also noted that recent scares from related Amazon product launches proved to be buying opportunities. The firm referred to Amazon's recent entry into the video conferencing market through Chime and the Contact Center market through Amazon Connect, triggering a negative reaction in the shares of LogMeIn Inc LOG and Five9 Inc FIVN, respectively.

"However, thus far, neither of these AMZN products has appeared to have had a meaningful impact on either of those companies' businesses," the firm said.

But for this Pinpoint noise, the firm noted that Vonage had shown strong momentum in both its UCaaS and CPaaS businesses in the second quarter. The firm indicated that Vonage's UCaaS had one of its largest bookings quarters in its history.

Related Link: Should Twilio Shares Be Bought On Weakness? _______ Image Credit: Amazon