CNBC reported TWLO as the most shorted stock in the Nasdaq with 63% short interest. They mentioned it at least twice. The traders are leaning against the shorts for now. SQUEEZE
Rob
http://www.fool.com/investing/2016/11/16/5-reasons-i-bought-…
Here is a quick article on Twilio rom the Fool. My biggest take away regarding Twilio is the competitive moat they are creating. Why customers will stay with them, why customers will pay a premium to stay with them, and why new customers will flock to them.
Apple is a whole other breed, but to this day the snarky comments about any new Apple product are how expensive it is compared to Windows offerings, or Google phones, or Samsung tablets, etc.
Yet, I gladly pay the premium for what Apple offers. Called a competitive moat that lasts over a competitive advantage period of time (CAP). A CAP can last weeks, a few years, or decades.
That is my reason for buying back into Twilio and now holding it. I am just too tired to keep buying into the quick pops. Much less effort to buy and hold.
We shall see. Already talk of recession now that Trump is not even sworn in yet…who knows. I’d rather live my life through recession and good times. That is what great companies and great investments allow a person to do.
Tinker
3 Likes
For those who might be interested in Twilio, this article (though dated Back to August) is a great place to start IMO:
With regards to Twilio, the article that Dumaflotchie recommended and linked to in his post (#22601 http://discussion.fool.com/for-those-who-might-be-interested-in-… ) happened to be a deep dive by Bert Hochfeld. Now I’ve seen Bert recommend stocks and say he was long, recommend stocks and say he might initiate a position, recommend stocks and say nothing about opening a position, be neutral after analyzing them, and even pan them, but I’d never seen him say he might initiate a short himself before Twilio.
It turns out it was a very good call, as Twilio was at $56 when he wrote back in August, and has hit $30 since, and is now at about $35. As for whether it is now a better buy, I’m not too sure, and will have to investigate further, but a huge short interest is both worrisome and encouraging. Worrisome because the shorts are often more knowledgeable about the stock than I am, and encouraging because the stock has already taken a huge fall and the shorts will have to buy back sometime.
Just rambling here…
Saul
7 Likes
There is never and apple to apple comparison, but I am going to use word processors and spreadsheets. Word and Excel are by far #1. They both have retained their pricing premium despite the fact Apple and Google give their respective programs away for free! And Apple’s stuff is great, and many people say Google’s stuff is great.
But Word and Excel stay by far the leader because it is the only format that guarantees compatibility. In fact, without Word ported to iOS the iPad Pro would simply not be possible. It is too important, despite Apple and Google offering great alternatives. It is not the functionality, per se, but the network.
Twilio by far dominates in developers and user interest. Every decision made to choose an API platform will have Twilio in it. There will be no such decision this will not be the case for. Once you learn to use it, you don’t want to learn to use anything else (and frankly why?, everyone practically is using Twilio, and takin the time to learn something else has less value), and if everyone is using it, it means that finding new developers will be much easier than if you use a competitor.
And once you start building out infrastructure with Twilio, your not going to stop and add unnecessary complexity by adding a second or third platform.
Another MSFT analog, but one that makes the case too strongly as I make no claim that APIs have the same switching costs, but DOS was hardly the best functioning operating system. IBM themselves, by far the lord of the PC, came out with an alternative once they realized what Bill Gates was selling and why. IBM’s solution was functionally better for the most part, had IBMs name behind it, could be bundled into the market leading purveyor of PCs, and yet this was not enough to even make a dent in DOS.
The network effect is funny that way. I cannot speak to whether or not Twilio will have that sort of benefit. All I can attest to is that Twilio has managed to continue to grow its market dominance, and grow in valuation, much faster than anyone predicted. It is possible competition will create a viable alternative sufficient to overcome the very large first mover and clear and overwhelming developer lead that Twilio has created. Not by coercion, but by attracting all these developers to its platform and keeping them there by making developers happy with the platform.
Tinker
8 Likes
Thanks to Tinker’s knowledgeable and enthusiastic posts, I decided to take a small try-out position in Twilio, which I did on Monday and Tuesday. I really appreciate Tinker’s discussion.
Remember that I may reverse course on this without notification. I’m only announcing taking it now, instead of at the end of the month, as my earlier post on this board referenced a short article and I didn’t want to seem deceptive.
Saul
Saul,
Does what Bert wrote in August concern you any? I realize the shares are about half as expensive now, but this conclusion bothers me:
What it is most certainly not is some unique force of nature with a competitive moat that might withstand serious pressure. Companies without technology moats and minimal sales and marketing spend are companies with vulnerabilities. Twilio is such a company, in my opinion.
http://seekingalpha.com/article/4001944-twilio-catchy-name-m…
Bear
1 Like
I noticed that too Paul. I had been considering opening a position and maybe I still will. Not sure
Hi Bear, Bert’s comments certainly gave me pause, but I really took a starter position because of these remarks by Tinker (slightly edited by me):
What Twilio and its peers are doing is trying to disrupt telephony technology by basically moving it to the cloud, and making it a software solution and not a hardware solution. In doing so, it creates undeniable efficiencies and flexibility….
Twilio by far dominates in developers and user interest. Every decision made to choose an API platform will have Twilio in it. There will be no such decision that this will not be the case for. Once you learn to use it, you don’t want to learn to use anything else. And frankly, why would you? Practically everyone is using Twilio, and taking the time to learn something else has less value. And if everyone is using it, it means that finding new developers will be much easier for a user than if the user is using a competitor…
And once you start building out infrastructure with Twilio, you’re certainly not going to stop and add unnecessary complexity by adding a competing second or third platform…
The network effect is funny that way. I cannot speak to whether or not Twilio will continue to have that sort of effect. All I can attest to is that Twilio has managed to continue to grow its market dominance, and grow in valuation, much faster than anyone predicted.
That made a lot of sense to me.
Best,
Saul
4 Likes
Bear, I disagree with the author’s opinion. We have had a long discussion on it on NPI board.
I own the stock again, sold out once the secondary was announced and warned on NPI to get out! When the quick secondary was announced but have bought back in.
I have no insider knowledge or expertise in regard. We have discussed TWLO’s sustainable competitive advantages in some detail. Had the fortune of a telecom software developer who uses TWLO to weigh in. TWLO is already dominating in marketshare with the existing price premiums. The price premium will have to materially grow for that to be an issue. But I suggest reviewing the 2 or 3 recent threads on NPI.
There use to be a time when I just knew it was time to buy up something and big. And I did that again at the IPO. At this point though I am just gonna hold and see if my investment thesis plays out over next few years (hopefully). I think history supports the confidence given past market battles and how they play out. We shall see.
Egg on face is never fun so shall hopefully avoid. Below are links to last two threads on topic.
http://discussion.fool.com/twlo-barron39s-equivalent-32496740.as…
http://discussion.fool.com/what-does-twlo-do-32497038.aspx
Tinker
2 Likes
Twilio’s lockup for IPO investors expires Dec 20th.
OT:Technical Analysis
With the fear of this possible selling pressure the stock has dropped from 71 down to 30. I’ve lowered my entry price point on this one down to 27 based on this review
https://verifiedinvesting.com/pro-traders/article/three-reas…
TWLO float is about 41% shorted.
1 Like
Thanks F1Fun, that was a nice link. The problem with lowering your entry point to $27 is that you might not get it. When the price has dropped from $70 to $30, holding out for a few more dollars seems a little greedy. If it goes back to $70, you won’t care if you paid $27 or $30, but you’ll kick yourself if you missed getting in. Just my way of thinking about it.
Saul
It is unclear to me what the effect of the lockup expiration will be when this company pulled the shenanigans they did in Oct:
On Oct. 7, Twilio announced that it was selling $400 million worth of shares, with $50 million coming from the company itself and the rest coming from major shareholders. The stock reversed course on the news, beginning a decline that has yet to cease.
From the NPI Board:
http://discussion.fool.com/twlo-barron39s-equivalent-32496740.as…
At least some portion of the shares that would have been dumped in December…were already dumped. So what affect does that have this time??
Keep in mind that stock declines after lockup expiration hasn’t always been that assured…remember Facebooks lockup as compared to Twitter??
Its all a guess ofcourse but one might surmise because of October’s machinations…this lockup could have a muted affect to the downside?
IMO, the decision own TWLO goes beyond this issue and more to whether it deserves your confidence.
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IMO, the decision own TWLO goes beyond this issue and more to whether it deserves your confidence.
Hi Dumaflotchie,
Do you feel it deserves your confidence, and if not, why not? I think the “shenanigans” of the secondary isn’t really relevant. Remember that the vast majority of the sale was by the venture capitalists (as I understood it from what I read) who were probably clamoring to get out when the price ran up to $70. There was very little sold by the company and little dilution from that. Do you feel the company’s prospects aren’t as good as they seem? Why not?
Thanks,
Saul
1 Like
Hey Saul:
I really didn’t care for that secondary because it wasn’t for the benefit of the company…that money essentially given away to insiders. I suppose you could argue otherwise but if I had been a shareholder back then and saw my investment tank from $70…for no benefit to the company I was invested in…that would be a bit irritating and IMO, suggests a loyalty to insiders and not the average shareholder.
But that said, the link I posted from the NPI expressed my gut instinct. Looking at videos of the CEO, just not comforting in terms of eluding conviction and planning and strategy.
The concern about whether there is really a moat or not regarding their technology…I am still not sure what a “supernetwork” is…and this was expressed as their sole moat.
Switching costs do not appear to be as high as we might have thought according to KTCFOol who has worked with Twilio (as you see in that thread). So customers do not seem to be as locked in…although Tinker has made some reasonable counter arguments.
Under any circumstance, I wouldn’t be holding now because I am not sure about that lockup expiration. This is a very volatile stock…and sometimes they make make look you foolish as much or more than intelligent.
http://www.businessinsider.com/amazon-joins-the-chatbot-conv…
Why Twilio? This is an article about Amazon getting into chatbots and artificial intelligence. About half way down is a paragraph discussing Lex, and how developers can use the listed platforms (as examples) to build on Lex (i.e., Alexa). The one thing all of those listed developers have in common, including Twilio, that is specifically listed as a communication platform (note, no other API vendor is listed) is that Twilio is the platform used by all of the listed vendors that this story considered to be important enough to list.
How much is that worth? Wa whoa (or dunno when k9 is translated into English). I don’t know. But this is what I see. Again, I don’t know what any of it is worth, perhaps not worth much, but this is the sort of unique criteria one likes to find early and just hold, just in case this time, one really has found the one…
I enjoy holding it and watching it anyways.
Tinker
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