Twilio Looks Ripe for More Activists to Get on Board
Wall Street is banking on cloud-communications firm Twilio TWLO –0.22% to become the next activist hotel.
Twilio stock (ticker: TWLO) surged 11% Wednesday after The Information reported that activist hedge fund Legion Partners is pushing the company to change its board and consider divestitures.
Few expect Legion will be immediately successful, in part because Legion only holds $40 million of shares of Twilio, a company with a market value of nearly $13 billion. Also, Twilio co-founder, CEO, and Chairman Jeff Lawson owns supervoting stock that gives him about 22% of the voting power although he only owns 3.7% of the equity, according to Twilio’s April proxy.
Other individuals and entities including Amazon.com (AMZN) own supervoting shares. Any activist would have a challenge gaining traction at the company. But the supervoting stock is set to convert on June 28 to common shares, evening the playing field a bit.
Twilio stock is underperforming peers year to date, and is 12 percentage points behind the iShares Expanded Tech-Software SectorIGV +0.65% exchange-traded fund (IGV). Shares are down more than 80% from a February 2021 record. Also, the stock has also plunged by double-digit percentages in three of the past four earnings cycles, and the next fall could open entry points for other activists.
Legion confirmed the Twilio stake. Twilio declined to comment.
Legion has worked with othercompanies. It was one of a group of activists that pushed for change at now-bankrupt Bed Bath & Beyond BBBYQ –2.54% (BBBYQ) in 2019.