“Armchair Trader Series” Recommendations
- Week Beginning -
Monday, September 17, 2018

by Ian Harvey

IMPORTANT NOTE: This is a recommendation and individual members can use their own discretion as to when to enter or exit!

You may also wish to read Stock Options Made Easy Trading Philosophy


"Trading Capital Management"

A New Option Trade – Advanced Micro Devices, Inc. (NASDAQ:AMD) Calls

Tuesday, September 17, 2018


** A New Options Trade: Buy the AMD NOV 16 2018 35.000 CALL at approximately $3.50.

Place a pre-determined sell at $7.00 if you wish.

Also include a protective stop loss of $1.40.

For complete information in regard to this trade CLICK HERE.

Option Trade – Twilio Inc (NYSE:TWLO) Calls

Monday, September 17, 2018

** OPTION TRADE: Buy the TWLO OCT 19 2018 90.000 CALL at approximately $3.80. Place a pre-determined sell at $7.60.

Also include a protective stop loss of $1.50.

Twilio Inc. (NYSE:TWLO), offering a Cloud Communications Platform, which enables developers to build, scale and operate real-time communications within software applications, has seen its shares climb more than soared 39% last month, driven primarily by a strong second-quarter earnings release on August 6, easily outperforming the S&P 500.

Twilio's second-quarter earnings report was the biggest catalyst for gains in August, after the company saw revenue jump 54% in the second quarter to $147.8 million, easily crushing the Street's forecast of $131 million in sales. That top line also beat the company's own guidance that it had issued in May, which called for $130 million in revenue at the midpoint.

Twilio added nearly 3,400 active customer accounts in the second quarter, bringing its total to nearly 54,000.In the past month; investors have witnessed an upward trend in fresh estimates. Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising.

Twilio is emerging as the uncontested leader in the rapidly growing and potentially huge Communication Platforms as a Service (CPaaS) market.

The CPaaS market, which comprises companies integrating real-time communication into their services, will be huge due to the secular shifts towards cloud-based communication, personalized customer experience, and digital engagement. Some peg this market as growing by five-fold over the next five years.

Twilio, with huge customer and revenue growth and a 95%-plus retention rate, has emerged as the leader of the CPaaS market. When you emerge as the leader in market that could grow by five-fold over the next several years, your stock naturally heads way higher.

Past Earnings…..

Twilio benefited not only from robust expansion within existing customers but also first- time deals with new ones, which resulted from the company's continued focus on introducing products as well as its go-to-market sales strategy.

Management pointed out solid growth in the company's core voice and messaging products to be a key driver. Moreover, positive response to Twilio Flex has given further impetus to the company's Engagement Cloud strategy.

The company registered a 32% surge in active customer accounts, bringing the total count to 57,350 as of Jun 30, 2018. During the second quarter alone, Twilio added more than 3,365 active customer accounts.

Moving Forward…..

Buoyed by a stellar quarterly performance, Twilio provided encouraging outlook for the third quarter and raised its full-year revenue guidance.

For the full year, Twilio now expects revenues between $585.5 million and $589.5 million, up from the previous range of $538 million and $544 million.

Similarly, base revenues are now estimated in the range of $546.5-$548.5 million, higher than the previous forecast of $507-$510 million.

The company now projects non-GAAP earnings per share in the range of 2-4 cents against the earlier projection of a loss of 7-10 cents per share.

For the third quarter, Twilio estimates revenues to be between $150 million and $152 million. Base revenues are anticipated in the range of $142-$143 million. Non-GAAP earnings are projected in the range of 2-3 cents per share.

Influencing Factors…..

Twilio also announced in August that it had hired Nils Puhlmann as chief trust and security officer. Puhlmann has over 20 years of cybersecurity experience.

Twilio's accelerating revenue growth went from a hearty 40.6% top-line surge in the fourth quarter of last year, to a 47.8% year-over-year leap in the first quarter, and then 54.1% in its latest financial report.

The stock came under pressure early last year when it warned that Uber -- at the time one of its two largest clients -- was checking out Twilio rivals and in-house solutions to satisfy some of its in-app communication needs. It didn't help when Lyft followed suit.

However, orders continued to pick up elsewhere, and more developers signed up with Twilio. By the end of the year, Uber was accounting for just 5% of Twilio's business and was no longer the needle-mover it was a couple of years earlier.

Total and base revenue rose 54% in Twilio's blowout second quarter, well ahead of the 35% to 37% gain it was forecasting three months earlier. It's not just the top line that surpassed internal and Wall Street targets. The $0.03 per share adjusted profit that Twilio posted in its latest financial report also bucked the company's earlier guidance and analyst models calling for more red ink.

Analysts and Hedge Funds Opinions

KeyBanc Capital Markets analyst Brent Bracelin upgraded the company to “overweight” with a price target of $99 last week.

Bracelin noted that Twilio has overcome a decline in revenue from Uber, and now could hit the $2 billion annual revenue mark by 2022 — up from $400 million last year. “Revenue growth has accelerated for two quarters, rising to 54% year-over-year last quarter after three years of deceleration on increasing customer diversification,” he said, while “Uber is now at 4% of sales vs. a 17% peak.”

Twilio is the leading communications API (application programming interface) powering Airbnb, Lyft, Hulu, and Instacart,” he concluded, name-dropping several new-age consumer-facing tech companies.

Several other equities analysts have recently commented on the company…..

  • Monness Crespi & Hardt boosted their price target on shares of Twilio from $85.00 to $108.00 and gave the company a “buy” rating in a report on Wednesday.
  • JMP Securities boosted their price target on shares of Twilio from $76.00 to $86.00 and gave the company an “outperform” rating in a report on Tuesday, September 4th.
  • Oppenheimer boosted their price target on shares of Twilio from $80.00 to $90.00 and gave the company an “outperform” rating in a report on Wednesday, August 22nd.
  • Mitsubishi UFJ Financial Group boosted their price target on shares of Twilio to $82.00 and gave the company an “overweight” rating in a report on Tuesday, August 14th.
  • Finally, Bank of America boosted their price target on shares of Twilio from $63.00 to $75.00 and gave the company a “buy” rating in a report on Tuesday, August 7th.

Four equities research analysts have rated the stock with a hold rating and seventeen have assigned a buy rating to the company’s stock. The stock has an average rating of “Buy” and a consensus price target of $72.36.


Twilio’s growth narrative is very promising.

Cloud is one of the biggest growth stories in the market, and CPaaS promises to be on the biggest growth segments within the cloud market over the next five to ten years.

Twilio has a quick ratio of 7.20, a current ratio of 7.20 and a debt-to-equity ratio of 0.98. Twilio Inc has a 1 year low of $23.25 and a 1 year high of $87.91. The company has a market cap of $8.28 billion, a P/E ratio of -111.90 and a beta of 0.33.