What Happened?
Shares of customer engagement platform Twilio (NYSE:TWLO) fell 3.2% in the morning session after 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, have 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.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Twilio? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Twilio’s shares are very volatile and have had 22 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 5 days ago when the stock gained 6.5% on the news that the company was added to the S&P MidCap 400 index. S&P Dow Jones Indices announced that the cloud communications provider will join the index effective prior to the opening of trading on Tuesday, August 19. This inclusion is significant as it typically boosts demand for a company's stock from index funds and other institutional investors that track the benchmark. The move follows the completion of UnitedHealth Group's acquisition of Amedisys, the company Twilio is set to replace. The announcement spurred a positive market reaction, reflecting investor enthusiasm and increased confidence in the company's growth trajectory.
Twilio is down 6.8% since the beginning of the year, and at $101.64 per share, it is trading 31.5% 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 $394.51.
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