One company that I have always checked in on is Twilio. They send text messages on behalf of companies for two-factor authentication and other services like chat bots and custom messaging strategies for marketers or companies to communicate.
It is a cool company and it is definitely impressive. Hat tip to what they've started. And look at this boom. Now worth $40 billion.
They generate about $1.5 billion in revenue per year at the moment. So if you do the math, you can see they are trading somewhere in the realm of 30x-35x revenue. If they double their revenue in a year, they will be at at 15x revenue. If they double it again they will be at 7x revenue. And if they double it AGAIN they will still be at about 3.5x revenue. Those are some seriously bullish expectations and while maybe it is possible, I'm not sure I see the risk-reward here going forward.
Perhaps they could acquire some revenue and build new products to expand faster. However, that's also not talking about the rise of competition. Twilio is not the only company that does this. There are few big names emerging and as the tech becomes more known and understood, this should only increase with some companies potentially doing it themselves instead of using a third-party vendor.
Anyways, that's my quick report. Congrats to Twilio longs and the company in general. I am still watching it as I believe it is a good barometer for the SaaS space. But, my core takeaway here is I don't see the risk-reward to the long side and will be watching for some weakness to potentially make a small, calculated trade toward the downside.
Thanks for reading!
It is a cool company and it is definitely impressive. Hat tip to what they've started. And look at this boom. Now worth $40 billion.
They generate about $1.5 billion in revenue per year at the moment. So if you do the math, you can see they are trading somewhere in the realm of 30x-35x revenue. If they double their revenue in a year, they will be at at 15x revenue. If they double it again they will be at 7x revenue. And if they double it AGAIN they will still be at about 3.5x revenue. Those are some seriously bullish expectations and while maybe it is possible, I'm not sure I see the risk-reward here going forward.
Perhaps they could acquire some revenue and build new products to expand faster. However, that's also not talking about the rise of competition. Twilio is not the only company that does this. There are few big names emerging and as the tech becomes more known and understood, this should only increase with some companies potentially doing it themselves instead of using a third-party vendor.
Anyways, that's my quick report. Congrats to Twilio longs and the company in general. I am still watching it as I believe it is a good barometer for the SaaS space. But, my core takeaway here is I don't see the risk-reward to the long side and will be watching for some weakness to potentially make a small, calculated trade toward the downside.
Thanks for reading!
I work at TradingView helping to build charts, tools, and software for everyone interested in financial markets.
Twitter: twitter.com/scheplick
Blog: scheplick.com/
Twitter: twitter.com/scheplick
Blog: scheplick.com/