Amid concerns about trade tensions, interest rates and global slowdown, several companies lost ground in 2018, some even saw prices declining heavily – Twilio was not one of them. In fact, the company has seen its shares skyrocket 278%! It is the largest stock, by market cap, to have more than tripled over the past year.
What is Twilio?
Twilio is a cloud communications platform company based in San Francisco, California. The firm has become one of the leading providers of in-app communication solutions around the globe.
One of their most famous products is Twilio Flex, which is a fully programable contact center platform. Basically, if you have for example a banks contact center department, instead of having to go into each and every communication application or system (e.g. SMS, video messaging, Facebook, WhatsApp, Weibo, LinkedIn, and others), to get back to your clients, the product customizes in a way that all the applications are integrated into one and only system.
This has helped a lot inhouse developers to focus on their core services. For example, Airbnb lets Twilio handle in-app messages on its platform so its developers can concentrate on its core short-term rental services.
Twilio's trailing revenue has climbed by more than 230% since the company went public, and it appears the business is on track to continue delivering strong growth.
The company's third quarter saw sales increase 68% year over year as user spending has increased and new customers have signed up for its services. The business ended the quarter ended in September with c.61,000 customers, up 32% year over year, and there's still a huge addressable market for it to tap into.
Twilio was obviously a great buy for opportunistic investors who got in earlier last year, but is it too late to chase the gains?
Strong demand for the company's internet-based telephone/messaging services and evidence that the company is moving toward consistent profitability have made Twilio one of the tech sector's top performers over the past several years. The stock trades up roughly 550% from its $15 IPO price in 2016.
Twilio isn't likely to triple again in 2019, but it has so many things going to its way that the upside might keep on going.
First of all, the cloud computing sector is very strong and although generic tech stocks have been struggling, this has provided to be a niche sector which I think it is still in the early stages.
Secondly, management is guiding for sales in the quarter ended in December to come in between $183 million and $185 million, representing roughly 60% growth year on year!
The stock definitely isn't cheap at all but its position as a high-growth niche market leader might justify those premium valuations.
How is the chart looking?
Twilio stocks impressive run has continued in 2019, with shares continuing to climb amid momentum for the broader market. The company's share price is up roughly 9.5% in January's trading so far.
From a technical perspective, we can see that the stock is in a strong buyers’ market. Furthermore, we can also see that a double bottom formation has been formed since November and fully completed early in January. The price has recently crossed over the resistance line and prices now look poised for a further upswing!
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