Shares of Twilio (NYSE:TWLO) have had a nice run to be sure. But if you agree with the legendary advice to “buy what you use,” TWLO stock is looking even better these days. Let me explain.
Fidelity’s celebrated mutual fund manager Peter Lynch was famous for his simple advice on investing which promoted buying stocks in companies you rely on in your day-to-day life. And in today’s on-the-go, mobile existence, in-app communications specialist Twilio has become more and more inexorably linked in how we go about doing everything.
From checking a booking on Airbnb to receiving a message our groceries will be at the doorstep shortly, Twilio is working behind the scenes to make today’s experiences seamless and more friendly. It’s why TWLO stock is up 130% over the past year — and partly why shares remain positioned to continue doing well for investors. Twilio’s importance in our lives comes from other companies’ need for Twilio’s cloud-based platform. This dependency has resulted in explosive growth for TWLO stock and fairly consistent Street toppling earnings reports over the last one to two years.
And with Twilio’s Q2 confessional a week away and shares technically shaping up, catalysts off and on the TWLO stock chart are readying for today’s bullish investors.
TWLO Stock Weekly Chart
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Since breaking out of a massive two-year-long, corrective cup-shaped base nearly a year ago, TWLO stock has more than doubled for its shareholders. The gain of course isn’t one to take for granted. There’s also some concerns about Twilio’s growth decelerating. Nevertheless, the Twilio price chart suggests being greedy, rather than fearful, is the better plan of attack.
Over the last six weeks, TWLO stock has been consolidating its aforementioned gains in an ascending triangle base. In of itself the continuation pattern is bullish. But as the base has formed on top of a three-month long jagged base-on-base structure, the platform for higher prices in Twilio shares looks even better.
Coupled with a supportive-looking stochastics set-up which shows a recent crossover pointing higher in neutral territory, the catalyst for momentum and an explosive breakout to new all-time-highs past $151 in TWLO stock are compelling.
With shares roughly 4% beneath the pattern high, it may take Twilio’s earnings announcement to act as a catalyst for shares to break out. That’s understandable, but waiting does pose its own kind of risk. A large bullish price gap could make buying an earnings-driven reaction prohibitive. Then again, there’s always the risk of pattern failure.
Bearing that in mind, I’d recommend putting TWLO stock on the radar for buying only if shares actually rally through $151. And if Twilio does technically oblige prior to earnings next week, I’d stress marrying the risk of holding long stock through the Q2 report with an out-of-the-money put to contain downside exposure without limiting the upside potential.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.
