It's common for investors to look at their portfolios and wonder "What if..." For example, you might wonder what your portfolio would be worth if you'd sold a certain stock or two. Or what would have happened if you'd bought a certain stock. Let's use the example of Twilio (TWLO +3.75%), a company specializing in communication capabilities for businesses -- such as facilitating communication between a company and its customers.
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How would you have done if you'd bought into Twilio five years ago? Well, from April 15, 2020 to April 15, 2025, a $10,000 stake would have become worth... $8,761. Oops! Instead of growing in value, your investment would have shrunk by 12%, an average annual loss of 2.6%.
NYSE: TWLO
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In contrast, the S&P 500 index -- which you can invest in quickly and easily via a low-fee index fund -- averaged annual gains of more than 15%, more than doubling in value. That provides a good lesson about the power of index funds.
But back to Twilio. What happened -- and what should investors do now? Well, between early 2020 and mid-2021, the stock soared, roughly quadrupling in value. That set up rather high expectations, though, and the stock started sinking, as many investors lost faith, due in part to Twilio spending heavily on research and development, on furthering its growth, and on fees to network services providers.
The company is in a better place now, though. It's net losses have been shrinking, and demand is growing for its artificial intelligence (AI) tools. Twilio's fourth-quarter report featured revenue up 11% year over year -- though its earnings-per-share (EPS) growth of 16% lagged expectations, which sent shares lower.
This lower stock price, with a recent price-to-sales ratio of 3.3, well below the five-year average of 4.8, presents an appealing entry point for risk-tolerant investors. Take a closer look if you're interested.
