This week’s Idea of the Week, is, buy $TWLO and hold until the stock reaches the $600s/share. Lest you think us nuts, since as we write the Nasdaq is about to hit the deck in the light of Apple and Amazon earnings snafus, read on.
OK, so, with this quarter’s print, TWLO is posing the question: is tech about to finally swan-dive, crushed under the weight of inflation, Fed tapering on the horizon, and everyone just-about-had-enough-of-stupid-lossmaking-companies-being-so-expensive ? Are we to dust off the CAPM textbooks and starting doing DCF valuations of railroad companies to eke out a meager living once more? Buy muni bonds and be happy with a couple points of yield? Or is tech about to make a HUGE MOVE to the upside?
Well, we can’t be sure, of course. But if you own TWLO, or you’re thinking of doing so, you need to form a view. Because what just happened was, the company printed a great quarter, and the market vomited on the stock.
So, either, this is time to start harvesting your gains in tech, realizing cash, getting ready for the Big One and learning how to calculate dividend cover ratios again; or, time to say, meh, and load the Super Duty with bargain-basement tech stocks engulfed by a dumpster fire.
Whilst we have in staff personal accounts been quietly accumulating exceptionally boring value names these last few months, whilst tech has been on fire - because everyone’s laughing at value investors right? - we don’t think tech is all over yet. We think the Big One is a ways away still. We think a bunch of tech names are poised to move up and bigly in the coming months. We think this not because of any special genius insight, but because the stock charts say so.
And in that light, when the market dumped TWLO by 15% after hours on a killer quarter, we bought the dip. Twice. (Our instant Trade Alerts told our Growth Investor Pro
subscribers in real time that we were doing so).
Twilio By Numbers
Here’s the numbers. Margins aren’t wonderful and cash usage continues, but the growth rate is superb.