What happened

Shares of Twilio (TWLO -0.40%) are falling today, down by 7% as of 11 a.m. ET. That slump has added to significant short-term losses for the cloud communications services stock, which has declined over 75% so far in 2022. The move downward was sparked by increasing worries about a recession on the way, along with specific concerns regarding Twilio's upcoming earnings report.

So what

The main factor dragging the stock lower was pessimism on Wall Street. The latest inflation reading showed that prices continued to stubbornly rise in September. Investors had been hoping that milder inflation might convince the Federal Reserve to ease up on its interest rate increases.

Today's report makes that move less likely, and so the risk of a recession is still top of mind for investors. That prospect tends to disproportionately hurt the stocks of companies like Twilio, given the fact that it is generating operating losses even in today's high-growth environment.

Investors are also worried about what Twilio might say about sales trends in its upcoming quarterly report. Some industry peers, including Zoom, have noted slower demand growth into late 2022. Twilio might sound a similar tone in its early November announcement.

Now what

That report, on Nov. 3, will also arrive on the same day that Twilio's management team holds its annual investor day presentation. Executives said back in early August that they were keeping a close eye on the shifting macroeconomic environment, and these two updates will determine whether Twilio sees more need for caution around late 2022 and early 2023 sales trends.

For context, revenue was up 41% in Q2, and management said at the time it "remain[s] confident in our growth trajectory."

If that trajectory didn't worsen by much in the intervening three months, then Twilio's stock might rebound. Yet if sales pressures show up in the context of continued net losses, the shares will likely stay volatile.