Twilio (TWLO) shares posted a monster gain on Wednesday to reach their highest level in the nascent company's history.
The stock rose 35.4% during the trading day to top out at $96.19 per share, $25.15 higher than Tuesday's close.
The run-up in share price for the San Francisco-based cloud king was precipitated by a better than expected earnings report on Tuesday evening which was coupled with a boost to full-year sales guidance.
"If fast growth in a large market is an attractive investment attribute, TWLO is a stock for you," Cannacord Genuity analyst Richard Davis wrote in his assessment.
The company has certainly been an attractive investment thus far in 2018, growing about 300% year to date while many of its top customers, such as Facebook (FB) , have suffered double-digit declines in the same period.
"When your revenue grows 68% year over year and that is an acceleration from past quarters, that's quite impressive results," Davis declared. "Indeed, we suggest that the past few quarters' results appear to have disproven the assertion that TWLO was nothing more than a commodity tools vendor."
J.P. Morgan analyst Mark Murphy added that the company's leadership in cloud communications for larger companies like Salesforce (CRM) , Amazon (AMZN) , Alphabet (GOOGL) , and Microsoft (MSFT) still adds value amidst a cloud "paradigm shift."
"Twilio's growth in our opinion will continue to be fueled by the proliferation of cloud and mobile application development that is reflective of its strong customer base," Murphy explained.
Analyst price targets have been blown past after Wednesday's big gains, with 12 of 14 analysts covering the stock raising their price targets amid the rally.
SendGrid Sent Higher
Mirroring Twilio's tear on Wednesday was its key acquisition of target SendGrid (SEND) .
Shares of the Denver-based email marketer rose 35.6% on Wednesday, mirroring Twilio's rapid run of almost exactly. The surge in SendGrid has brought the market cap of the company higher than the $2 billion value that Twilio is proposing to pay.
While Twilio executives declined to comment on the transaction given an upcoming SEC review process of a joint proxy statement on the pending deal, analysts picked up on the synergies that the tandem stock surge suggests.
"From our view, results look mostly in line with recent history, which should help quiet any skepticism suggesting SendGrid may have elected to sell into weakness," Deutsche Bank analyst Michael Turrin noted on Wednesday morning.
The acquisition should add to bullishness on the company integrating its business across voice, text, and email across the company's "flex" programmable contact center platform.
Building Developer Base
The real value that the company seems to be driving rests in its enthusiastic and evangelical user base that only seems to be growing.
"The evangelists have really come in and driven up the use cases," Dougherty & Co. analyst Catharine Trebnick told Real Money. "That's a key part of the continued earnings beats since 2017."
Twilio CEO Jeff Lawson drove home the same point during the earnings call on Tuesday, explaining that one of the main goals of the company is "winning the hearts and minds of developers" wherever they are.
"Our relentless focus on innovation and empowering developers continues to resonate in the market, powering our platform business model," he told analysts. "I still think there is a lot of room to run in terms of developer momentum, 90% of the world's contact center infrastructure is still on-premise and I think there's a lot of developers that want to move to the cloud."
Trebnick noted that the larger degree of use cases and a larger base of developers is also key to growth that is independent of any one partner.
"[Reliance on Uber] was a concern, but it's really faded," Trebnick explained. "The fact that they are no longer going to disclose Uber separately shows they've moved beyond reliance on one or two customers."
JPM Securities analyst Patrick Walravens picked up on the developer evangelism as key to growth as well.
"We continue to like Twilio as its results reflect the strength of the API economy and what can happen when a company effectively serves the needs of the developers in that economy," he said.
While analysts have affirmed their buillish theses based on the game changing nature of the cloud, Twilio's price to earnings ratio still stands at a staggering 628.
The company recently announced the addition of former General Electric (GE) Digital chief commercial officer Khozema Shipchandler to try and move the company towards a more traditional profitability model.
"The primary attribute we have been looking for was someone with a track record of operational excellence at scale to take us to the next phase of our growth," Lawson told analysts on Tuesday's earnings call. "Khozema has spent more than 20 years at GE in a number of financial leadership roles across several multibillion-dollar businesses."
Both Lawson and investors will hope that Shipchandler's financial leadership will be able to make the balance sheet justify the company's high valuation.
After Tuesday's earnings and Wednesday's super-surge, the market certainly looks confident in the company's ability to make that happen.