What happened
Shares of Twilio (TWLO -1.59%) were moving higher today after The Information reported that an activist investor was pushing for changes in the board, inspiring hopes for a recovery in the sagging software-as-a-service (SaaS) stock.
As a result, the stock was up 8.7% as of 1:48 p.m. ET.
So what
This morning, The Information reported that activist investor Legion Partners has met several times with the board of directors and management, calling on them to make changes to the board and make moves, including divestitures in order to improve the company's profitability and boost the stock price.
CEO Jeff Lawson is also set to lose the supervoting status of his shares next month, reducing his voting stake from 21.8% to 3.7%, which could be a catalyst for shareholder-driven changes to the company, as that will also give activists like Legion Partners more power.
The news comes at a time when Twilio is struggling as demand for its communications software has slowed following a boom during the pandemic, and the stock is down close to 90% from its peak in 2021.
The company said in February it would lay off 17% of its employees and close some of its offices in order to cut costs and improve profitability.
Now what
Analysts responded to the news with Piper Sandler saying more activist investors could emerge, especially as the supervoting-shares class is ending, which could lead to more calls for a breakup of the company into a communications platform-as-a-service business and a software business.
Given the collapse in the stock price and the company's struggles to deliver growth and profitability, it wouldn't be surprising to see more activists emerge to push for changes.
