Twilio by most accounts would be considered a startup success story. But after peaking at $400 a share in September 2021, when everyone was riding fantasy valuations, the company has experienced a long plunge to around $66 a share. That kind of performance tends to get the attention of activist investors, so perhaps it’s no surprise that Anson Funds and Legion Partners are reportedly turning the screws on the company.

The communications API company appeared to be reacting to that pressure by cutting costs, which in corporate speak translates into laying off another 5% of its workforce Monday morning. As the stock price has fallen, so has the number of employees; the announcement comes a little over a year after the company cut 11% of the workforce in September 2022 and 17% in February 2023.

But this round seems more like Twilio is throwing the activist dogs a bone by showing it could get even leaner still. Laying people off during the holidays isn’t a great look, but with investors breathing down its neck, perhaps the executive team felt it had little choice.

At the height of its valuation, Twilio made some big moves. In 2018, it purchased SendGrid for $2 billion, and in 2021 it bought customer data platform Segment for $3.2 billion. Both moves were designed to combine customer data with the communications data the company was collecting via its core communications APIs.

Whether that worked is still open to debate, but with the stock price in the $60s, it feels extravagant in retrospect. At the time with so much value, it was worth trying to expand the company’s capabilities. Today, not so much.

With two activists putting on the pressure, and the stock price plunging, it leaves the company in a vulnerable position. This fight feels more like Zendesk’s, which ended up being sold off to private equity, than Salesforce’s, where it ultimately fended off its activists.

The big question here is whether the dramatically lower stock price, the questionable acquisitions and other bad financial data points mean this is a case where the activists have a point. And if they do, what does it mean for Twilio?

Activists mixing it up

Any way you look at it, the company has faced great instability of late. CEO Jeff Lawson announced in February that he was splitting the company into two units. He named Elena Donio to run the data and apps side of the house, which includes Segment.  She announced that she would be stepping down later this month during the company’s Q3 2023 earnings call.