Twilio Inc. (TWLO): A Bull Case Theory

We came across a bullish thesis on Twilio Inc. on Uncle Stock Notes’s Substack. In this article, we will summarize the bulls’ thesis on TWLO. Twilio Inc.'s share was trading at $129.77 as of December 2nd. TWLO’s trailing and forward P/E were 316.32 and 23.75 respectively according to Yahoo Finance.

Twilio Inc., together with its subsidiaries, offers customer engagement platform solutions in the United States and internationally. TWLO has emerged from a prolonged period of transformation with its third-quarter 2025 results signaling a decisive turnaround under new CEO Khozema Shipchandler. After years of stock depreciation, activist pressure, and organizational restructuring, Twilio delivered 15% revenue growth and 23% non-GAAP EPS growth, highlighting improved profitability and operational discipline.

The company has refocused on its core, high-margin communication API business, cutting inefficient departments and streamlining processes, while scaling its workforce from over 8,000 to 5,541 employees, demonstrating the platform’s efficiency and scalability. Key metrics, including a rebound in the Net Dollar Expansion Rate (DBNE) to 109% and strong free cash flow of $248 million for the quarter, underscore a sustainable recovery.

Strategically, Twilio simultaneously returned capital to shareholders through a $350 million stock buyback and positioned for future growth by acquiring Stytch, an AI-based identity platform, strengthening its “customer engagement layer” in the AI era. The acquisition addresses the critical trust and identity verification challenge for automated AI interactions, aligning with Twilio’s vision to integrate communications, identity, and service execution. Guidance was raised across the board, with Q4 revenue projected at $1.31–$1.32 billion and full-year revenue growth revised to 12.5%, reflecting confidence in stabilized, predictable growth and cash flow generation.

Valuation analysis suggests a forward P/E of 20–25x FY26 EPS and a DCF-based intrinsic value of $130–$155 per share, indicating a compelling entry point. While risks remain, including margin pressure from hyperscale providers and M&A integration challenges, Twilio has reestablished a disciplined, profitable, and growth-oriented model. The company now generates robust cash flow, executes targeted acquisitions, and is strategically positioned for revaluation, offering an attractive risk/reward profile for investors.

Previously we covered a bullish thesis on Twilio Inc. (TWLO) by Stefan Waldhauser in March 2025, which highlighted the company’s operational turnaround, cost-cutting, strong free cash flow, and AI-driven communications platform positioning. The stock has appreciated approximately 31.12% since then as improvements played out. The thesis still stands, while Uncle Stock Notes shares a similar view but emphasizes the new CEO’s strategic moves and Stytch acquisition.

Twilio Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 67 hedge fund portfolios held TWLO at the end of the second quarter which was 73 in the previous quarter. While we acknowledge the risk and potential of TWLO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TWLO and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.