What happened
Twilio (TWLO 1.25%) shareholders outperformed a rising market last month. Their stock gained 17% in June compared to a 2.2% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.
The rally put the cloud communications specialist back into positive territory for the year and up over 50% since mid-2020. But the boost might not have much staying power.
Image source: Getty Images.
So what
After all, June's stock price rally was more about the broader market than any news out of Twilio itself. Tech stocks enjoyed an unusually strong month, and Twilio was frequently caught in that updraft.
It helped that shares had recently plunged from their highs, too. The stock had been up over 30% in early 2021 before falling to a double-digit loss by late May. That move set the stage for a rebound rally as tech indexes rose in June.
Now what
Twilio's business looks as strong as ever. While net losses continue, its base of active customers swelled through late March, the company said in May. Changes in work behavior related to the pandemic appear likely to continue lifting sales, too. "We are in the midst of a massive shift in the way companies engage with their customers that is driving a generational opportunity for Twilio," CEO Jeff Lawson told investors.
Lawson and his team are predicting continued market-thumping growth ahead, with sales likely to rise between 47% and 50% for the fiscal second quarter. Its official results for this period should come out in early August.
In the meantime, shares are likely to stay volatile as investors' attitudes adjust to changing opinions about cloud-based services stocks in the wake of the pandemic. Those swings often don't reflect concrete changes in Twilio's outlook but instead are unavoidable aspects of owning growth stocks.
