Twilio Faces Downgrade Over Fears Of Increased Competition And Execution Challenges

Shares of Twilio Inc TWLO continued to decline in early trading on Monday, after having closed last week in the red.

The downgrade in the rating is based on commoditization, mixed execution, and the absence of any “near-term activist story,” according to RBC Capital Markets.

The Twilio Analyst: Rishi Jaluria downgraded the rating of Twilio from Sector Perform to Underperform, while reducing the price target from $55 to $50.

The Twilio Thesis: Checks indicate that the SMS space is becoming "significantly more competitive" and commoditized, and Twilio could find it harder to charge a premium to other vendors, Jaluria said in the downgrade note.

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“Twilio’s mixed execution is no secret, but we are increasingly concerned Twilio is mis-executing with Segment,” the analyst wrote. He added, “We believe an overhaul of Segment’s GTM is critical to turning around the business.”

Twilio’s dual-class share structure “collapsed a few weeks ago,” and it is likely to be “difficult for an activist to effect change,” Jaluria further stated.
TWLO Price Action: Shares of Twilio were down 1.16% to $61.53 at the time of publication Monday.

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