Is now an advantageous time to buy Twilio (TWLO +0.38%)? In this clip from "3 Minute Stocks Updates" on Motley Fool Live, recorded on Feb. 16, Motley Fool contributors Brian Withers and Toby Bordelon debate whether Twilio is worth buying and discuss why it might be an optimal stock pick in comparison to software giant competitors.
Toby Bordelon: Brian, that 30% revenue growth you talked about, that's really nice. That's a good number. However, it's half of what growth was in 2021 year-over-year revenue growth and it's well under the 2019 levels. Let's assume they hit that target. Let's assume they hit 30%. Does that, in your opinion, justify the current price or is it still too expensive even with the recent pullback?
Brian Withers: Toby, are you snubbing your nose at 30% growth year-over-year? [laughs]
Bordelon: I'm not saying it's bad. I'm just saying it's not 75% like I saw in 2019.
Withers: That is true. I think Twilio is coming into its own and it's becoming a much larger, more mature platform. I'm going to compare it against two software giants, Adobe (ADBE +0.65%) and Microsoft (MSFT +1.01%), from a valuation perspective and let's see where they land. This is the price-to-sales ratio over the last three years. Twilio is in purple and you can see back in 2019, it hit 20. It was almost up to 40 back in 2021. Adobe has been going up and down a bit and then Microsoft's on the bottom. Just steady as you go, just increasing over time. What's interesting is, of these three, Twilio is actually the lowest and I think has the most growth opportunity ahead of it to continue to grow. I really like where Twilio is today from a price-to-sales ratio. I know that's not perfect from a valuation perspective, but I think it's in a really good place right now.
