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Why Twilio Jumped 19% in June

By Chris Neiger - Jul 12, 2017 at 2:25PM

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A bullish investor note helped boost positive investor sentiment for this volatile stock.

What happened

Shares of Twilio (TWLO 1.54%) skyrocketed 19.7% last month, according to data provided by S&P Global Market Intelligence, after JMP Securities analyst Patrick Walravens published a positive investor note about the company. 

So what

Twilio makes software that allows companies to easily add in-app communications to their services. For example, Uber uses Twilio to allow drivers and riders to communicate with each other without having to exchange phone numbers. Other big clients include Facebook's WhatsApp and Airbnb.

Red Twilio logo.

Image source: Twilio.

The company's huge share price bump came last month after Walravens said that the company's share price will double between now and 2019. Twilio's stock was already climbing on its own before then, but the prediction sent the company's share price spiking even more.

Twilio investors have been a fickle bunch over the past past few months, so it's not all that surprising that stock price skyrocketed on just one bullish investor note. Last month, the company's share price fell by nearly 26% after the company said Uber will rely less on Twilio's services than it has in the past. That news caused Twilio's management to decrease its sales forecast for the full year, and it set off a mini panic among its investors.

Now what 

Twilio has managed to beat analysts' earnings estimates for five straight quarters, and it still has a very strong customer base (even if Uber is reducing its reliance on the company).

The company expects second-quarter revenue to be between $85.5 million to $87.7 million, and for full-year revenue to be $359 million at the midpoint. The full-year revenue forecasts are slightly lower than previously expected because of Uber's decision, but they still represent about 30% year-over-year growth. 

Investors should expect more volatility from the company for the foreseeable future. The company is still in growth mode, and investors have already proved that any news -- whether good or bad -- can put its share price in a tizzy.

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Twilio. The Motley Fool has a disclosure policy.

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