What Happened?
Shares of customer engagement platform Twilio (NYSE: TWLO) jumped 1.8% in the morning session after Rosenblatt Securities initiated coverage of the stock with a "Buy" rating and a $140 price target.
The firm's price target suggests a significant upside from Twilio's previous closing price of $106.03. In its research note, Rosenblatt stated that the customer engagement platform is at a "key inflection point." The firm believes that years of investment into establishing market leadership are poised to generate substantial profitable growth and significant free cash flow, signaling confidence in the company's future financial performance.
After the initial pop the shares cooled down to $108.02, up 1.8% from previous close.
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What Is The Market Telling Us
Twilio’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 16 days ago when the stock dropped 3.2% on the news that the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners. A key reason for this trend is that much of the recent market gains were concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap."
Additionally, mixed earnings reports from retailers, such as Target, added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation.
Twilio is down 1% since the beginning of the year, and at $108.02 per share, it is trading 27.2% below its 52-week high of $148.35 from January 2025. Investors who bought $1,000 worth of Twilio’s shares 5 years ago would now be looking at an investment worth $477.62.
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