Twilio (NYSE:TWLO) shares tumbled on Friday after the customer engagement software company issued weaker-than-expected third-quarter guidance, prompting investment firm Stifel to downgrade the stock.
Analyst J. Parker Lane lowered his rating on Twilio (TWLO) shares to hold from buy and slashed the price target to $90 from $200, noting the lack of visibility into profitability. Lane noted that organic revenue growth continues to fall, with third-quarter sales expected to grow between 29% and 30%, compared to 33% in the second quarter and 35% in the year-ago period.
Additionally, there are concerns over non-GAAP gross margins and a "wider operating loss than consensus" for the next period, leaving the timeline for "achieving material profitability" as "uncertain."
Twilio (TWLO) shares fell nearly 9% to $89.40 in premarket trading.
The Jeff Lawson-led Twilio (TWLO) said it expects to lose on an adjusted basis between $0.37 and $0.43 per share in the third quarter, while sales are forecast to be between $965M-975M, compared to estimates of $972.32M.
Twilio (TWLO) topped estimates for the second quarter, as it lost an adjusted 11 cents per share on $943.35M. Analysts were expecting Twilio (TWLO) to lose 20 cents per share on $920.97M in revenue.
The company said active customer accounts rose to more than 275,000, compared to 240,000 active customer accounts as of June 30, 2021.
Late last month, investment firm Macquarie downgraded Twilio (TWLO) to neutral, citing the fact they see a recession as "likely" which could present risks to the company.
Analysts are mostly positive on Twilio (TWLO). It had an average rating of BUY from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates TWLO a HOLD.