I have now sold ALL my Twilio – one of my largest positions until yesterday’s earnings call.
Yep. They really had an awful quarter. As Saul points out:
When pinned down by analyst questions they acknowledged that Twilio grew organically at 47% and Sendgrid by even less (30% I think I remember).
And it’s not going to get better going forward…probably will slow just due to their size and scale. So we’re looking at about 40% growth, maybe lower. That’s obviously not awful, but what is? The valuation. They are still at a PS of 14…I could see that dropping to 10 or even less if they can’t grow over 40%. The stock price could eventually be buoyed by actual EPS, but currently their PE is over 600 and even at 20% of revenue (which is a LONG way off) it would be a PE of 70. This is not a bargain, or a buying opportunity. This is a selling opportunity. I’m thankful I got out with it only being down about 10% today.
If Twilio can make steps toward profitability, shares you own today might do ok in the long run, but this is no longer a world beater. To operate as they are, 40% growth is not enough.
Bear