Thursday's Headlines: Twilio Lays Off 11% Of Workforce
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Twilio (TWLO) +10.0%
Farfetch (FTCH) +6.7%
2U (TWOU) +6.5%
DraftKings (DKNG) +6.1%
Starbucks (SBUX) +5.5%
Moving Down ⬇️
Lovesac (LOVE) -6.9%
Ericsson (ERIC) -3.3%
Wynn Resorts (WYNN) -3.2%
Baozun (BZUN) -2.6%
Prologis Inc. (PLD) -2.6%
Here are the stories that you need to know ahead of market-open today, Thursday the 15th of September.
Twilio Lays Off 11% Of Workforce ✂️
Shares in Twilio (TWLO) spiked 10% yesterday and remain up in pre-market trading this morning, despite the company announcing plans to lay off 11% of its workforce.
Becoming the latest tech company to tighten its headcount, Twilio’s CEO Jeff Lawson sent out an email to all employees yesterday outlining the restructuring plans. In the note, he acknowledged Twilio’s recent growth, but conceded that “it was too fast” and came “without enough focus on our most important company priorities”.
Much of the lay-offs seem to have affected the areas of the company “where customers can succeed without as much human intervention”, which includes its Go To Market divisions, as well as research and development (R&D) and general and administrative (G&A).
So why is the stock up on such seemingly bad news?
Well, circling back to the “priorities” mentioned by Lawson above, Twilio has been very vocal about its hopes of targeting profitability by 2023. These latest cuts seem part of that drive, with Lawson acknowledging:
“I take responsibility for choosing to grow our team faster and to pursue many priorities beyond these four priorities over the recent years. And now, I also own the decision to become more focused – resulting in this layoff.”
Like many other tech stocks, it’s been a tough couple of years for Twilio, with its share price currently more than 80% off all-time highs.
Netflix Ads to Reach 40 Million Viewers 📺
According to The Wall Street Journal, Netflix’s (NFLX) nascent ad-supported tier could reach up to 40 million viewers as soon as the third quarter of 2023. The information was gleaned from internal documents shared with ad buyers and takes into account the company’s initial 12 launch markets of the U.S., Brazil, Mexico, Japan, the U.K., France, Germany, Korea, Spain, Italy, Australia, and Canada.
Projections from the company foresee 4.4 million unique viewers on the ad-supported platform by the end of the year, with this figure accelerating rapidly to 40 million in the following three quarters. 13.3 million of these are expected to be in the U.S. All of this information is important to advertisers as it dictates an ad’s reach and in turn how much they are willing to spend. Considering Netflix is planning to charge approximately $65 for every 1,000 views — the higher end of the scale and well ahead of rival Disney — it is confident that ad buyers' pent-up demand will immediately make the streaming service one of the prominent names in video advertising.
Netflix's decision to turn to ads was motivated by its first drop in subscriber numbers in over a decade. The stock has been in freefall ever since, down more than 60% year-to-date and reaching five-year lows back in June. However, the promise of a new revenue stream has piqued investors’ interest and we have seen signs of life in the past few months. For founder Reed Hastings, it is a major reversal from his long-standing views about advertising on the platform, however, it looks to be a necessary catalyst to revitalize the business.
Moderna May Provide Vaccines to China 💉
Shares of Moderna spiked on Wednesday after the company’s CEO said it had held talks with the Chinese government about providing COVID-19 vaccines.
As much of the world continues to open up following the pandemic, the Chinese government is still locking down large parts of the country and imposing strict restrictions on movement when the virus is detected. While the United States and Europe have effectively learned to live with COVID, China has adopted a zero-COVID strategy, barring the importation of foreign vaccines and relying on the draconian measures that characterized the early days of the pandemic.
So far the country has relied on domestically produced vaccines — the efficacy of which has been called into question. However, that might be about to change.
Moderna CEO Stephane Bancel told Reuters that the company had spoken with government officials about getting their mRNA vaccine approved, but that no decision had been made.
“We are open, we have the capacity,” said Bancel. A Moderna spokesperson declined to comment on whether the talks were still ongoing.
Moderna is a pharmaceutical company focused on RNA therapeutics. Shares of the company increased dramatically in 2021 after the company was one of the first to have a COVID-19 vaccine approved. That vaccine, Spikevax, is currently the company’s only commercial product. However, Spikevax now has a number of competitors and has seen demand wane as governments focus on high-risk individuals rather than the general population. Approval in China would be a huge victory for the company, which currently has over 20 other RNA treatments in clinical trials.