Twilio stock plummeted on Wednesday even though the company beat estimates for earnings and revenue and added a record number of customers during the first quarter. It seems investors were far more concerned by the 2.5% reduction in the company’s revenue outlook for this year because of the big changes its number one customer is making in how it uses communications services.

twilio stock

Twilio stock tumbles on weak outlook

Twilio Inc (NYSE:TWLO) reported losses of 4 cents per share on $87.4 million in total revenue, coming out ahead of consensus on both lines, as Wall Street had been looking for losses of 6 cents per share on $83.6 million in revenue. The company added 4,089 customers during the first quarter, which was a new quarterly record. Its gross margin came in at 58.6%, which was better than the consensus of 55.5%.

For the second quarter, the company expects $85.5 million to $87.5 million in revenue, compared to the consensus of $87.7 million, and losses of 11 cents to 10 cents per share, which is worse than the consensus of 8 cents per share in losses. For the full year, Twilio now looks for $356 million to $362 million in revenue, which is well below the consensus of $370 million, and losses of 30 cents to 27 cents per share, which also is below the consensus at 16 cents per share in losses.

JPMorgan analyst Mark Murphy cut his price target for Twilio stock from $36 to $33 per share but maintained his Overweight rating. He noted that the broader base of business grew by 45% to 50% annualized in the first quarter, so he believes the company actually boosted its revenue outlook for the rest of the business excluding Uber, its biggest customer. He pegs the reduction for Uber at about $15 million to $20 million and believes Twilio increased its outlook for the rest of its business by $5 million to $10 million.

Twilio stock downgraded by Pacific Crest

Pacific Crest analyst Brent Bracelin went further than JPMorgan and downgraded Twilio stock to Sector Weight due to the problems with Uber. He said he had underestimated the risk posed by a dislocation at its biggest customer. He warned that the company’s growth might not accelerate again until the second quarter of next year and added that “competitive noise may overshadow a sliver lining within the core.” That silver lining was that the core revenue excluding Uber and WhatsApp accelerated a bit to 64% year over year growth in the first quarter from 61% growth in the fourth.

Multiple other firms also adjusted their price targets on Twilio stock. JMP Securities cut its target from $37 to $33, while Goldman Sachs slashed its price target on Twilio stock from $38 to $27.

And yet, some see a buying opportunity in Twilio stock

Drexel Hamilton analyst Brian White cut his price target for Twilio stock from $50 to $44 per share following last night’s guidance cut. But he added in his May 3 follow-up note that the crater left in the company’s stock price by Uber presents a buying opportunity. He described Wednesday’s sharp selloff as “an extreme overreaction to a slightly lowered outlook.”

He also feels that Twilio would have boosted its guidance if it hadn’t been for Uber, which he noted generated 17% of its sales in the fourth quarter but only 12% in the first quarter. He doesn’t believe that most of Twilio’s customers will follow in Uber‘s footsteps by changing how they use various communication services, citing the ride-sharing service’s size and success as reasons for the changes it is making.

Shares of Twilio stock tanked by approximately 26% to as low as $24.15 during regular trading hours on Wednesday.