Twilio (NYSE:TWLO) shares jumped more than 10% intra-day today following the report from The Information, according to which activist investor Legion Partners has met several times with Twilio's management and board, suggesting multiple changes to operations, including divestitures.
Oppenheimer reiterated its Outperform rating on the company, noting it had anticipated a potential activist involvement, as super-voting rights for Class B shares (10 votes per share) are set to expire in less than a month.
According to the firm, this would result in a significant reduction in the voting power of key shareholders, including CEO Jeff Lawson, whose control would decline from about 21% to approximately 3%. As a comparison, Legion Partners owns roughly 2% of Twilio stock (according to the latest 13-F).
According to Barclays, Twillio’s management has already announced 2 RIFs (~25% of its workforce), a GTM restructuring, a $1 billion share authorization, and added a GAAP profitability target (by 2027).
According to the bank, Twillio has more direct CPaaS market growth headwinds (macro/2FA/A2P) and competitive concerns for its Data & Applications business (encroaching CDP and reverse ETL competition) than a pain point that requires activist involvement at present. “That being said, frustrated investors may be supportive of more representation on TWLO’s board at this point,” added Barclays.