Twilio (NASDAQ:TWLO) stock dropped in late October after the cloud communications giant reported third-quarter numbers that smashed consensus estimates, but also included a weaker-than-expected profit guide for the fourth quarter.
Because Twilio stock has been so hot for so long — as of this writing, the stock is up 194% year-to-date — even the slightest perceived imperfection in the earnings report was due to cause weakness in shares.
And that’s exactly what you’re getting. A weaker-than-expected fourth quarter profit guide is a slight imperfection. That slight imperfection is causing weakness in perfectly valued TWLO.
But there’s two important things to note here:
- Twilio management has a tendency to under-promise and overdeliver. This looks like more of the same, meaning actual fourth-quarter numbers will likely blow this weak guide out of the water.
- TWLO stock is a long-term winner, powered by secular tailwinds in cloud communications.
Accordingly, then, this dip in Twilio is little more than a golden buying opportunity in a name with a ton of long-term upside potential.
Here’s a deeper look.