Twilio drops 3% after HSBC cuts rating over Meta Muse AI

Twilio shares fell about 3% early Friday after HSBC downgraded the communications software company. The bank cited uncertainty over how much economic value Twilio can capture from Meta Platforms' Muse AI agent.

HSBC cut its rating on Twilio to Reduce from Hold while maintaining its price target of $211. The brokerage stated that rising AI-agent activity may increase demand for calls, messages, and authentication services. However, higher traffic does not necessarily translate into a larger revenue share for Twilio.

The bank expects Twilio's role with Muse to focus mainly on connecting AI calls to traditional phone networks and handling transactional or verification messages. Those services face competition from other communications providers and wholesale carriers.

HSBC also warned that Meta could select other providers or build direct connections with carriers, limiting the spending that flows to Twilio. The downgrade follows rapid interest in Muse, which Reuters reported reached 2.8 million downloads in its first 12 days.