What a difference a few weeks can make!
Before embarking on a specific discussion of Twilio's (NYSE:TWLO) valuation it is, I think, necessary to discuss the background-in particular the rather violent sector rotation of the past couple of weeks. Twilio stock will not perform well if the market continues to favor a risk off trade. And they will perform strongly, I believe, if the risk off trade of the past few weeks reverses. This article is written from the point of view of a much more benign environment ahead for high value tech names. If that is not the view of a particular reader, then most of the rest that follows will not be worthwhile reading.
From time to time, Seeking Alpha requests some of its authors to prepare articles on names that are likely of interest to the SA community. And so it is that I have come to write an article about Twilio and its valuation. I have been involved with Twilio shares over an extended period. I initially bought the shares in December 2017 when they were in the mid-twenty dollar range and wound up selling my position in February last year between $150-$170 share. That didn't turn out to have been the best timed sale, of course, but I was able to replace Twilio with other high-growth IT names, so the sting is relative.
Twilio has been a controversial name on SA. Many "value" analysts have consistently decried its valuation as the shares appreciated. I initially wrote on the name a bit more than 3 years ago. I liked the shares at that point, and have more or less consistently believed in the strategy and the business model of the company although like most businesses it has had some quarters in which execution was better than others.
