If you are wondering whether Twilio is still a bargain after its wild ride over the years, you are not alone. This article is going to focus squarely on what the stock might actually be worth today.

Despite some recent softness, with the share price down around 1.8% over the last week and 3.1% over the past month, Twilio is still up 16.7% year to date and about 12.3% over the last year, while its 3 year return of roughly 179.5% contrasts sharply with a 5 year decline of about 62.8%.

Recent moves in the share price have been shaped less by splashy headlines and more by a slow reset in expectations around growth, profitability, and where Twilio fits in the broader cloud and communications stack. At the same time, ongoing debates about software valuations and higher interest rates have kept sentiment toward growth names like Twilio on a bit of a knife edge.

On our standard checks, Twilio only scores a 2/6 valuation score, which means it screens as undervalued on just two of six metrics. However, headline scores are only the start, so we will walk through the main valuation approaches next and then finish with a more nuanced way to think about what Twilio is really worth.

Twilio scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

A Discounted Cash Flow model estimates what a company is worth by projecting its future cash flows and then discounting those back into today’s dollars. For Twilio, this 2 Stage Free Cash Flow to Equity model starts with current Free Cash Flow of about $778.5 Million and then layers on analyst forecasts and longer term estimates.

Analysts see Free Cash Flow rising toward just over $1.0 Billion within the next several years, with Simply Wall St extrapolating that to around $1.39 Billion by 2035. These figures, all in $, are then discounted to reflect the time value of money and the risks in Twilio’s growth path.

On this basis, the model arrives at an intrinsic value of roughly $118.48 per share. Compared with the current share price, the implied DCF discount suggests Twilio is about 7.5% overvalued, which is close enough to call it roughly in line with fair value rather than clearly cheap or expensive.

Result: ABOUT RIGHT

Twilio is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Twilio.

For businesses like Twilio that are still focused on scaling and reinvesting rather than maximizing profits, the Price to Sales, or P S, multiple is often a more useful yardstick than earnings based metrics. Revenue tends to be more stable than short term profit margins, so it can offer a cleaner view of what investors are willing to pay for each dollar of sales.

In theory, faster growth and lower risk justify a higher normal P S ratio, while slower growth or elevated risk should pull that multiple down. Twilio currently trades on about 3.94x sales, which is above the broader IT industry average of roughly 2.47x, but below the peer group average of around 6.51x. This suggests the market is giving it some, but not premium, credit for its growth prospects.

Simply Wall St’s Fair Ratio framework goes a step further than simple comparisons by estimating what P S multiple Twilio should trade on, given its growth outlook, profitability profile, industry, market cap and risk factors. That Fair Ratio comes out at about 4.65x, modestly above the current 3.94x, which points to the shares being somewhat undervalued on this basis.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Twilio’s story with the numbers behind its future and what you think the stock is really worth. A Narrative on Simply Wall St is your own explanation for why revenue, earnings and profit margins might evolve a certain way, and it links that story to a financial forecast and then to a clear Fair Value that you can compare to today’s Price to decide whether you see Twilio as a buy, hold or sell. Narratives live inside the Community section of the platform that millions of investors already use, and they update automatically as new earnings, news and guidance come in, so your Fair Value view stays live rather than frozen in time. For Twilio, one Narrative on the Community page sees fair value down near $68 per share while another sees it closer to $138, illustrating how different, well reasoned stories can lead to very different but transparent valuations.

For Twilio, however, we will make it really easy for you with previews of two leading Twilio Narratives:

???? Twilio Bull Case

Fair value: $138.04 per share

Implied undervaluation vs last close: approximately 8.6%

Forecast revenue growth: 7.93%

Sees AI driven, omnichannel communication tools and voice AI as key drivers of higher margin growth, stronger customer engagement, and an expanding addressable market.

Expects product innovation, integration of Segment data, and international expansion to improve customer stickiness, diversify revenue, and lift margins and free cash flow.

Accepts risks from low margin messaging mix, regulatory pressures, and intense competition, but still views the stock as offering upside with a fair value well above the current price.

???? Twilio Bear Case

Fair value: $68.00 per share

Implied overvaluation vs last close: approximately 87.2%

Forecast revenue growth: 24.14%

Argues Twilio lacks the consistent profitability, predictable earnings, and wide moat that a disciplined value investor like Warren Buffett would typically require.

Views the current valuation as offering limited margin of safety given tech sector competition, business model uncertainty, and industry disruption risk.

Suggests Twilio may suit growth oriented investors, but that more conservative, long term value investors should wait for sustained GAAP profitability or a much lower entry price.

Do you think there's more to the story for Twilio? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include TWLO.

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