I mean it's bad news, but they may probably lose 12% of their business vs a 30% stock price drop while still hitting estimates (admittedly at the low end) for revenue this quarter. The price should definitely drop, but why is this not an overreaction?
Stock price is about expectations for the future. The last quarter only matters insofar as it offers insight into the future development of a business. And that 30% drop is also not necessarily about a single issue like Uber leaving.
TWLO guided lower for Q2, coming in below expectations on both profit and sales. Furthermore, Uber may be 12% of their business now, but that company is growing, and this means the market expected TWLO to make even more money with them in the future, which is not happening anymore. This also highlights how concentrated TWLO's business is, and how quickly they can lose a meaningful chunk of their revenue. Lack of diversification means more risk, and maybe the market had not fully priced that in.
Might be an overreaction, might not. If Uber dropping out is a leading signal for "major clients aren't getting value out of their business relationship with Twilio", then that's a major problem going forward.
It's great for those that targeted their puts at the $25 range and definitely for those that have been sitting on the sidelines waiting to jump in. It's not going to stay down here for long. I agree. Total overreaction.
I mean it's bad news, but they may probably lose 12% of their business vs a 30% stock price drop while still hitting estimates (admittedly at the low end) for revenue this quarter. The price should definitely drop, but why is this not an overreaction?