Communication software startup Twilio’s decision to launch their IPO the day before Brexit was one of the more mysterious financial moves in tech this quarter. Depending on your perspective, it was either brilliant or deranged — particularly given the pressure on the company to perform after last season’s disappointing crop of tech IPOs.
On the one hand, had the UK voted to stay, the resulting stock surge would have been a huge boost to their already promising valuation. On the other, many London mobile app developers suspect that Brexit acted almost as a buffer for the startup. Sure, their stock jumped almost 100% in the first day of trading, but had it tanked (as some pundits feared a tech IPO in an unfavorable market would), Brexit could have served as a convenient “excuse,” providing a shield against investor suspicion of the tech industry generally.
Regardless of the motives behind the timing, the situation has worked out surprisingly well at the time of this writing, with Twilio’s stock beating out mobile app developer and Market Street expectations.
Whether that streak is sustainable is another question. Investors have reason to be suspicious of yet another “cloud” company with negative profits banking on rapid growth to ride them through stock market scrutiny. Particularly with some of Twilio’s biggest revenue sources being in contract-free arrangements with the likes of WhatsApp (15% of revenue), the fear of a sudden misfortune taking a chunk out of operational funds is far from unthinkable. As it stands, the sizable investments backing up Twilio’s rapid growth seem to have quieted investor concerns, enough to drive the stock to a high of 92% above initial offering.
Twilio isn’t out of the fire yet. Mobile app developers and tech communities worldwide will be watching Twilio’s IPO outcome closely in coming weeks for a sign of what’s to come in tech IPOs. Twilio, for the time being, seems more than happy to play the “canary in a coal mine.”Tags: Brexit, financial strategy, IPO market, Jeff Lawson, mobile apps, mobile market, monetization, SMS apps, startup culture, startup strategy, startups, stock market, tech futures, tech ipo, tech market, tech stocks, technology futures, Twilio, Twilio IPO, VC, venture capital, Wall Street