The Twilio Effect

October was a rough month and alot of the speculative money was on the sidelines. Then Twilio reported a ridiculously great report and gapped up huge. The Twilio gap on its earnings report seems to have caused a lot of hot money to front run into stocks like Square, Alteryx and Trade Desk.

When too many traders front run a stock no matter how good a report may be it can cause a short term phenomenon. Simply put they are more sellers than buyers. Prudent institutional investors will wait until this phenomenon is over with before they start buying.

The stock market is a patient man’s game. Square, Trade Desk and Alteryx all have promising futures but you must have a high tolerance of pain to stomach the volatility. Let’s visit what these companies do in a week or so.

I liked Alteryx growth internationally, showing 99% growth in that segment showing there is plenty of growth left for them and they still are growing over 50 percent domestically. At one point in after hours this stock gapped up over 24%. Only to give back those gains Thursday. But a good indicator of where things are headed if the market holds up.

I liked that Jack Dorsey is not concerned about profits right now but wants to continue to invest in new services that will continue to make a moat around Square. Successful diversified financial services companies can have huge market caps and Square is still a baby.

The Trade Desk announced great results tonight but if everyone is expecting a quick 35% return it becomes a crowded trade and there’s immediate selling.

If the Nasdaq goes higher I’m expecting these names will continue to be leaders going into the end of the year.

Be patient and happy investing!!



You have to consider the valuation here. TWLO trades at 15.5 P/S after the pop, AYX at over 20 after a slight decline.
AYX has got much better margins, that’s why it’s got a higher valuation. It just didn’t have as much room to grow in stock price as TWLO did.
I’m keeping AYX but considering adding TWLO.