Why Twilio Stock Triumphed This Week

What happened

Activist investors can cause company managers to lose sleep, but at times, their involvement is encouraging for shareholders. That was the case with software-as-a-service (SaaS) provider Twilio (NYSE:TWLO) this week. As a result, its share price rose by almost 12% across the Tuesday-to-Friday stretch (markets were closed Monday for the holiday), according to data compiled by S&P Global Market Intelligence.

So what

According to a report on business news site The Information published Wednesday, activist firm Legion Partners has had several meetings with Twilio's board and management. The subject of these talks, according to the site, was potential modifications to the tech company's operations. Possible asset divestitures and changes in board composition were apparently among the specific matters discussed.

In what seems like not a coincidence, Twilio CEO Jeff Lawson will soon lose the "supervoting" status of his company shares. This will drastically cut his share of the voting power to less than 4% from the current level of nearly 22%. Theoretically, that would make it easier for a bloc of shareholders to enact changes he might resist.

Twilio has struggled in recent years. Reflecting its troubles, it announced a significant round of layoffs and office closures in February. Its share price has withered along with the decline in its fortunes.

Now what

While the speculation about what Legion Partners might accomplish was a major catalyst, there are also influential bulls in the market helping to support Twilio's stock price.

One of the more prominent ones is Cathie Wood, founder of exchange-traded fund manager Ark Invest. On the same day The Information's report was published, Wood waxed enthusiastic in a Bloomberg TV interview about the investment potential of specialty software titles. She mentioned Twilio in particular, along with UiPath and telehealth company Teladoc.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Teladoc Health, Twilio, and UiPath. The Motley Fool has a disclosure policy.