A combination of short selling, pressures of an imminent secondary offering and concerns over earnings have hurt the stock.
In addition, the company still appears to be very far away from profitability.
Investors should avoid the stock for now.
Shares of Twilio went on a tear after its June IPO, and the company reported impressive second-quarter results that included revenue growth of 70%.
But then the bottom fell out.
In the first week of October, Twilio filed a $400 million offering proposal. The sale seemed logical because sellers wanted to cash in on the 130% gains since the company's IPO.
By the time Twilio priced the offering at $40 a share, the stock was already under pressure. Many investors were disappointed by the fact that Twilio wouldn't gain a dollar from the offering, which was diluting equity.
Twilio's preliminary third-quarter results were largely overlooked, even though they appeared robust, showing a 56% gross margin, higher sales and a gross profit.