Should Twilio Shares Be Bought On Weakness?

Shares of Twilio Inc TWLO dipped notably lower towards the end of Tuesday's trading session after reports surfaced that Amazon.com, Inc. AMZN Pinpoint and its two-way messaging capability could enter the market and compete against Twilio.

A Twilio spokesperson responded to the report and told Benzinga, "This builds on the relationship we have had with them for some time powering SNS."

Baird: Buy On Weakness

The biggest takeaway is that Twilio confirmed it powers the two-way messaging and also supports various other Amazon products, Baird's William Power commented in a research report. Amazon has been and continues to be a partner and customer of Twilio, and although the two companies can end up competing against each other in the future, Amazon accounts for a "low percentage of revenue."

It is also possible that Amazon could end up acquiring Twilio if Pinpoint becomes a bigger focus over time, Power suggested (see his track record here). After all, Twilio's CEO Jeff Lawson is an ex-Amazon employee and the two companies have collaborated in many projects in the past, including Amazon SNS, Chime, Connect and now Pinpoint.

Bottom line, investors should consider being buyers on any ongoing weakness in Twilio's stock as its growth opportunities remain unchanged.

Power maintains an Outperform rating on Twilio's stock with an unchanged $39 price target.

At time of publication, shares of Twilio were up 6.72 percent at $29.36.

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