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Twilio Makes Major Investment in Messaging Operation Syniverse

Twilio Makes Major Investment in Messaging Operation Syniverse

Recently, Twilio (NYSE:TWLO) brought out some exciting earnings news that left the stock up substantially in its wake. With revenue up 65% against the same time last year, it was easy to see why there was such interest in the cloud communications platform provider. Now, a new report suggests that Twilio's cloud communications presence is about to get a lot stronger thanks to a big new investment in Syniverse, a Carlyle Group (NASDAQ:CG) company.

One Big New Stakeholder

Twilio plans—and has reportedly signed a definitive agreement to that effect—to put up to $750 million in cash behind Syniverse, making Twilio a major minority shareholder behind its current majority holder, the Carlyle Group.

The investment in question is designed to give Syniverse more to work with as it works to develop innovative mobile communications products, giving it a better chance at long-term growth. Meanwhile, with Twilio putting up extra cash into such a move, Syniverse will also get better insight into the needs of large-scale enterprise customers.

The resulting move also sets up a wholesale agreement between the two firms, which has Syniverse set to handle the messages between Twilio's customers and mobile network operators (MNOs). Reports suggest that the move would ultimately value Syniverse at a figure between $2 billion and $3 billion.

Bullish Sentiment Only Goes Up for Analysts

Meanwhile, the word from the broader analyst pool is one of increasing interest in the company. Twilio has gone nowhere but up in every facet for the last six months based on our latest research.

The company has had a consensus “buy” rating for the last six months, and sentiment has only grown more bullish by degrees that entire time. Six months ago, the company had five “hold” ratings and 18 “buy” ratings to its credit. Three months ago, that shifted to three “hold” ratings and 18 “buy”. A month ago, the three “hold” ratings remained but two new “buy” ratings stepped in bringing the total to 20 “buy”. Today, we have just one  “hold” rating left and 21 “buy” ratings, the most bullish sentiment has been yet.

The price target, meanwhile, has careened upward, nearly doubling in the last six months. Six months  ago, the price target was at $250.67. Three months ago, it jumped to $328.64. A month ago, a much smaller jump arrived and the company's price target increased to $345 even. Now, it's fully $100 higher at $445, and that still represents upside potential as the company's current share price is $406.42 as of this writing.

Onward and Upward

Undoubtedly, Twilio got a lot of edge out of the market in 2020, when demand for cloud-based anything exploded. The everything-at-home movement that pretty much summarized 2020 called for a lot of new infrastructure. Not only did we need new hardware in job lots—computers, various peripherals, cameras, and the like—but we also needed the necessary software to run all this hardware. That gave a lot of people a lot of reason to look more closely at Twilio, who offered various calling services from text messages to phone calls and various other communications functions centered on application programming interfaces (APIs).

By building a connection with Syniverse, it can likely help augment its own lineup of services, as well as improve on the ones it's already got in play. That's vital, especially for a market where there are so many options in cloud communications efforts; we've already seen what Slack (NYSE:WORK) and Zoom (NASDAQ:ZM) have done in this market. Twilio has to fend off plenty of competitors thanks to the sheer number of ways people can communicate via online connection.

Focusing more on mobile devices might well give Twilio an edge here; back before the coronavirus outbreak hit, we'd been seeing mobile devices take on a new prominence as people left the office in favor of coffee shops or the beach. With the coronavirus starting to retract thanks to uptake rates in vaccinations and treatment options, as well as the recent changes in testing methods, the idea of a mobile device return isn't out of line. After all, people have more than demonstrated that any concerns about remote working not working well have been overblown; how many businesses have been saved in 2020 by remote work?

Still, Twilio is going to have its work cut out for it going forward. A new focus on innovation and market development, however, could be just the strategy it needs to preserve its advantages and make some new ones as the world at least somewhat starts to get back to normal.

Companies in This Article:

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Twilio (TWLO)$307.15flatN/A-108.15Buy$454.35
Slack Technologies (WORK)$41.23flatN/A-71.09Hold$40.78
Zoom Video Communications (ZM)$295.24flatN/A378.51Hold$431.80
The Carlyle Group (CG)$44.98flat2.22%-73.74Buy$37.36