Corporate insiders know more about their businesses than anyone else. If these individuals are buying company stock, it’s often worth taking a closer look.
In this report, we are going to highlight some interesting insider buying at Twilio Inc (TWLO:US). Twilio is a US technology company that provides a cloud communication platform that enables software developers to customize the way businesses communicate with their clients. The company is listed on the New York Stock Exchange and currently has a market capitalization of approximately $13.69 billion.
Insider Buying at Twilio
2iQ data shows that on February 24, two insiders at Twilio purchased stock. Those who bought shares were:
- Founder, Chairman and CEO Jeff Lawson (158,081 shares @ $63.32 per share)
- Board member Donna Dubinsky (3,995 shares @ $62.72 per share).
Combined, the insiders bought around $10.25 million worth of company stock.
Large CEO Purchase
It’s the size of the CEO’s stock purchase that stands out here. Not only is it large in nominal terms ($10 million) but it is also large in relative terms as it has increased the size of his holding by 86%. The size of the trade suggests that the insider believes the stock is significantly undervalued right now.
It’s worth pointing out that there are unlikely to be many people who know Twilio better than Mr. Lawson. He co-founded the company in 2008 and has served as CEO since.
$1 Billion Share Buyback
Twilio recently posted solid Q4 results that were ahead of analysts’ estimates.
For the quarter, revenue was up 22% year on year to $1.02 billion, versus the consensus forecast of $1.0 billion. Adjusted earnings per share came in at 22 cents compared with expectations for a nine cent loss.
On the back of these results, Twilio launched a $1 billion share buyback – a development that went down well with investors.
The company also noted that it had reduced its workforce by around 17% and was closing some offices to focus on profitability.
“While our vision remains, the way we operate and execute has changed — all in service of driving better focus for the business and ultimately enhancing value creation for our shareholders,” commented Mr. Lawson.
In light of the new focus on profitability here, we see the insider buying as a bullish signal.