A lot of stocks have been hit hard in recent months, and not all of them are going to bounce back. Some downticks have been fully earned, but that doesn't seem to be the case with Twilio (TWLO 0.09%) or Roku (ROKU 0.54%)

Twilio is the leading provider of in-app communication solutions, making your smartphone even smarter. Roku is the top dog among streaming video hubs for TVs, commanding nearly double the U.S. market share of its closest competitor.

You're probably going to spend a lot of time on mobile apps and streaming video in the future, making the recent sell-off in Twilio and Roku that much more appetizing. Even if you have just $2,000 to invest, let's go over why splitting that between Twilio and Roku may be the right choice right now.

Three riders on a bus, all checking out their phones.

Image source: Getty Images.


Twilio shares have fallen by more than 40% since peaking in February, but it's not as if its business is suffering a similar fate. Revenue soared 65% for its latest quarter, and even if you factor out needle-moving acquisitions, you still have a healthy organic top-line growth rate of 38% for the quarter.

Developers lean on Twilio's platform to let users get more done without having to leave the app. From two-way communication without revealing either side's contact info -- like when you're chatting with your food-delivery driver or trying to book a holiday vacation rental home -- to simple things like resetting passwords, you're probably contributing to Twilio's growth without realizing it. There are now more than 250,000 developers as active Twilio customers, and they're spending 31% more on the platform than they were a year ago. 

Red ink is a problem, and investors are concerned enough about the losses to detract from the spectacular top-line gains that Twilio is producing in a booming niche. We're only going to be spending more time on smartphone apps, and with that comes the challenge for app developers to make sure they beef up their in-app communication solutions. Twilio's future is bright, even if the stock is now 41% below the all-time high it established earlier this year. 


We're streaming a lot of video from the biggest screen in the house -- our smart TV -- and that's not going to change anytime soon. Roku is the top solution, available freely as the default operating system in 38% of the smart TVs sold in North America. Folks can also buy Roku dongles for as little as $20 that plug into their TVs for access to Roku's free-to-use platform.

Business is strong. Platform revenue soared 82% in its latest quarter. Hardware sales haven't been as kind, and supply-chain constraints and rising costs on that front will linger into the year ahead. The audience continues to grow despite the hardware hiccups, thankfully due to its market leadership in factory-installed new TVs. 

Roku plays nice with thousands of streaming apps. It's had a few tense negotiations with media and tech giants to keep them on its hub -- more recently with YouTube and YouTube TV -- but they have always been resolved before starting to get in the way of user growth. Advertisers and providers of streaming apps know that they have to work with Roku if they want to reach younger audiences who aren't consuming traditional marketing outposts. 

Roku stock has fallen 54% from this year's summertime highs. This would be an alarming sight if we hadn't seen similar drawdowns before. The stock has fallen between 43% and 61% every year since going public in 2017, only to hit a fresh all-time high the following year. History tells us that buying Roku when the leader among streaming service stocks is down is a smart thing to do.