For his second "Executive Decision" segment of Monday's Mad Money program, Jim Cramer spoke with Jeff Lawson, chairman and CEO of Twilio (TWLO) , the internet messaging provider.
Analysts have recently questioned the company's growth potential.
Lawson quickly addressed the analysts' concerns by reminding investors that Twilio has a usage-based revenue model that can fluctuate from quarter to quarter. So while usage may have come in a little light this quarter, longer term, he said, Twilio's growth remains intact.
Lawson said that companies can't afford to get dis-intermediated from their customers, which is why direct messaging to create meaningful, personalized experiences is more important than ever.
Companies like Intuit (INTU) have used Twilio to increase customer engagement by 30%, Lawson offered as an example.
Finally, Lawson commented on the recent departure of COO George Hu. He said Hu always had bigger plans than Twilio and the pair worked to create a seamless transition for his departure.
Cramer said Twilio is a great story that we rarely see at a price this good. Let's do our own research and look at the charts of TWLO.
In our last review of TWLO back on October 15, we wrote that "Traders could add to TWLO longs here or initiate a new position. Risk to $300 now, raise stops from $278. Our late December or early first-quarter 2022 price target is $471." Let's check on how things are progressing.
In this updated daily bar chart of TWLO, below, we can see that prices gapped lower at the end of October and quickly hit our recommended stop at $300. Prices have stabilized but may not be entirely "out of the woods". TWLO is trading below the declining 50-day moving average line and the declining 200-day moving average line.
The On-Balance-Volume (OBV) line declined sharply into late October and has steadied a bit this month. The Moving Average Convergence Divergence (MACD) oscillator is bearish but could move to a cover shorts buy signal.
In this weekly Japanese candlestick chart of TWLO, below, we can see that prices have held the $275 level but the chart and indicators have not improved. Prices remain below the declining 40-week moving average line. The weekly OBV line remains pointed lower and the MACD oscillator is bearish.
In this daily Point and Figure chart of TWLO, below, we can see that the software is projecting a potential downside price target in the $195 area.
Bottom line strategy: I assume that traders have been stopped out. The charts have not yet improved enough to warrant a new long position. I recommend a sidelines position for now.
