Twilio Stock Price Jumps!
and, "Weekly Options Members” Make 410% Potential Profit In two (2) Trading days!

More to Come?

April 7, 2021

Twilio stock has risen 4.04% while the S&P 500 has fallen -0.05% on Tuesday, Apr 6. TWLO has gained $14.07 from the previous closing price of $348.43 on volume of 1,587,722 shares. Over the past year the S&P 500 is up 53.02% while TWLO has gained 315.44%.

And, “Weekly Options Members” managed to gain a potential profit of 410% within 2 trading days.

More upwards movement is expected, and for those that have exited the trade, a new trade may be considered.

Why The Trade Recommendation On Twilio?

The Major Catalysts for This Trade.....

1. Past Earnings Report.....

Twilio's fiscal 2020 financial performance was quite encouraging. Revenue jumped 55% year over year to $1.76 billion. However, the company's GAAP loss from operations increased from $369.8 million in the prior year to $492.9 million in 2020, mainly due to increased operating expenses and fees to network providers. But the operating expenses grew by 44% year over year -- which is slower than the revenue growth rate. In fact, the company's fiscal 2020 non-GAAP income from operations was $35.7 million, a stark improvement from a loss of $1.8 million in 2019.

Twilio is inching closer to becoming a profitable organization. Hence, it can continue to soar much higher in the coming quarters.

2. Guidance.....

Twilio's guidance for the current quarter indicates that it is on track to sustain a terrific pace of growth. The company expects top-line growth of 45.5% in the current quarter after finishing fiscal 2020 with a revenue increase of 55%. Also, it is worth noting that it had originally expected 30% to 31% revenue growth for 2020, and it ended up blasting past those expectations due to the tailwinds created by the pandemic.

It won't be surprising to see Twilio exceed its own expectations once again in 2021 as more companies make the switch to cloud-based contact centers. According to Twilio's 2021 state of consumer engagement report, 95% of the 2,500 enterprise decision-makers surveyed expect to either maintain or increase their investment in customer engagement, and 87% believe that digital engagement will play an important role in their business.

3. Digital Transformation Acceleration.....

92% of the businesses Twilio surveyed said that the COVID-19 pandemic had led them to accelerate their shift to the cloud. Twilio anticipates this digital transformation will continue. It points out that the forecast that annual investments in digital transformation will double by 2023 to $2.3 trillion and account for over half of information technology spending. As such, it won't be surprising to see more call center seats move to the cloud.

Twilio has estimated that only 17% of the 15 million contact center seats were in the cloud before the pandemic. That proportion is expected to jump to 50% by 2025, setting the stage for the company to sustain its high rate of growth for years to come.

4. Diversification.....

Twilio has been diversifying into higher-margin businesses with the help of acquisitions that should help support long-term margin expansion. The recent purchase of Segment, for instance, will support cross-selling opportunities at Twilio and expand the company's presence into the fast-growing customer data platform market.

5. Analysts Positivity.....

Analysts estimate that Twilio's revenues will grow by more than 30% annually over the next couple of years. That trend could continue over a longer period as contact centers move to the cloud.

Jefferies analyst Samad Samana initiated coverage of Twilio with a Buy rating and $451 price target.

Samana said Twilio has been successfully disrupting the communication space for several years now. He said Twilio should be able to maintain impressive growth numbers even as the business scales up.

Since 2016, Twilio has generated about 60% compound annual revenue growth, and Samana said the company should continue to grow at above a 30% annual rate through at least 2023.

Twilio’s focus on developers differentiates the company from its high-tech peers, Samana said. In addition, the company has been focusing more on landing large customers and working more closely with Deloitte and other partners.

Twilio was modestly profitable in 2020, but Samana said that profitability will increase significantly over time as the company dials back its investments and adds more high-margin revenue streams. Twilio’s long-term gross margin target is above 60%.

“Messaging carries a ~45% GM, but Voice, Email and App Services are all well above 70%,” Samana wrote in the note.

From a valuation perspective, Twilio shares are trading roughly in-line with its high-growth tech stock peers. However, Samana said Twilio deserves to trade at a premium valuation to other growth stocks because of its dominant positioning in a nascent growth market.

Several other analysts have also commented on the company.....

• William Blair restated an "outperform" rating on shares of Twilio in a research note on Thursday, February 18th.
• Northland Securities boosted their target price on Twilio from $390.00 to $500.00 in a research note on Thursday, February 18th.
• Stifel Nicolaus assumed coverage on Twilio in a research note on Wednesday, January 13th. They issued a "buy" rating and a $425.00 target price on the stock.
• KeyCorp boosted their target price on Twilio from $420.00 to $550.00 and gave the company an "overweight" rating in a research note on Thursday, February 25th.
• Finally, Canaccord Genuity boosted their target price on Twilio from $385.00 to $510.00 and gave the company a "buy" rating in a research note on Thursday, February 25th.

Two analysts have rated the stock with a hold rating and twenty-two have issued a buy rating to the company. The company presently has a consensus rating of "Buy" and an average price target of $442.36.

Summary.....

Twilio's stock price declines in recent weeks offer a better opportunity to buy options of a company that appears primed for growth.