TWLO – It’s no secret I’ve been questioning the size of my Twilio allocation the last couple of months. This month I finally took action and pared it down considerably. My final steps to get there consisted of two parts. First, I dug into their 7/31 earnings:
stocknovice,
This was a really outstanding portfolio review writeup! I particularly liked how you analyzed each situation and recent business results and linked that back to your decisions.
I have been having similar thoughts to you about TWLO. I had a large 17-18% allocation on TWLO for a while and I also had made a rather large options bet on a stock move to the upside after the past earnings result. It ended up being my largest options loss of 2019 (about a loss of 1.2% of my portfolio value). I didn’t think TWLO’s result was horrible or anything but I was disappointed that they didn’t hit it out of the park like the past 2 earnings. I was hoping that Flex would see more traction and that TWLO would start to see some synergies from their SendGrid acquisition. Also, with Signal 2019 coming up, my options bet was based on seeing a continuation of their recent massive earnings beats and some exciting announcements out of Signal.
Recently, I reduced my TWLO allocation from 16.1% down to 12.1%. One third of the proceeds will be reserved as cash to pay for my capital gains from my TWLO sale. The other 2/3 of the proceeds were used to buy ZS shares to boost my allocation to 13.2%.
I still think TWLO will be a great investment but now I just don’t know how long they will start seeing financial rewards from Flex and the SendGrid cross-selling. The next near-term hope for TWLO may be the spend on TWLO from the 2020 US Presidential Election. Last year, TWLO had a rather large one time revenue benefit from an election in another country. I think we can expect that the spend on the US Presidential Election will dwarf that other election. When will the spending start and for how many quarters will the spending last?
Chris