Jim Cramer on Twilio Inc (NYSE:TWLO): ‘I Still Cannot Recommend’

We recently published a list of the 10 Stocks to Buy and Sell Before the Third Quarter 2024 According to Jim Cramer. Since Twilio Inc (NYSE:TWLO) ranks 5th on the list, it deserves a deeper look.

Jim Cramer in a latest program discussed the changing consumer trends in the US, wondering whether the consumer is just “fed up” of paying high prices and becoming “frugal.” Cramer said this “frugal thesis” is not “obvious” but he has recognized this latest trend based on some new developments. Cramer named a few consumer companies that are benefitting from the changing consumer behavior because of their discounted price offerings. Cramer rejected the notion that dollar stores are cheap. He said these stores raise prices “aggressively” and calling them dollar stores has become a “misnomer.” The CNBC host said the consumers “want prices lower” and that’s why dollar store companies are getting crushed in the new environment.

Jim Cramer also said the “renting society” is winning the “owning society,” pointing to a new trend where consumers are renting boats instead of buying them to enjoy the experience without spending a fortune.

For this article we watched several latest programs of Jim Cramer aired on CNBC and picked some stocks he’s recommending investors to buy or sell. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Is Twilio Inc (NYSE:TWLO) Stock to Buy and Sell Before the Third Quarter 2024 According to Jim Cramer?

Twilio Inc (NYSE:TWLO)

Number of Hedge Fund Investors: 45

Cloud-based communications solutions Twilio Inc (NYSE:TWLO) is one of the stocks Jim Cramer is bearish on. When asked about the stock in a latest program, Cramer said:

“I still can’t recommend Twilio Inc (NYSE:TWLO)”

Morgan Stanley analyst Meta Marshall recently downgraded the stock to Equal-Weight from Overweight citing lack of growth catalysts for the next 12 months. The analyst also cut their price target on the stock to $60 from $70.

“The primary reason we are stepping to the sidelines on Twilio Inc (NYSE:TWLO) is a lack of a revenue catalyst over the next 12-18 months, limiting multiple expansion and potentially challenging ability to meet FY25 Street expectations. For Segment (<10% of revenues today), given itssale is largely an enterprise software sale vs. a developer sale (as much of the rest of the Twilioplatform is) combined with a number of key changes to structure / leadership, we think it shouldtake some time for growth to reaccelerate,” the analyst said.

However, the analyst said they still like the stock’s “long-term” story. Twilio Inc (NYSE:TWLO) Q1 results show Twilio is quickly improving its business and narrowing losses. During the first quarter its loss narrowed to $55.3 million when compared with a $342.1 million loss reported last year.  Restructuring costs in the quarter came in at $9.9 million, down from $121.9 million  reported last year.  Gross profit margins rose from 48.75% to 51.96%.  Twilio Inc (NYSE:TWLO) expects organic revenue growth of 5% and 10% this year. Adjusted operating income in the period is expected in the range of $585 million and $635 million up from $550 million and $600 million.

Average analyst price target on the stock for the next 12 months is $68.52, which presents a 22% upside potential. Given the improvement trajectory Twilio Inc (NYSE:TWLO) is on, the stock can be a nice option for long-term investors.

Overall, Twilio Inc (NYSE:TWLO) ranks 5th on Insider Monkey’s list titled 10 Stocks to Buy and Sell Before the Third Quarter 2024 According to Jim Cramer. While we acknowledge the potential of Twilio Inc (NYSE:TWLO), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Twilio Inc (NYSE:TWLO) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These Stocks.

Disclosure: None. This article is originally published at Insider Monkey.