Twilio Stock Breaks Out to Test Key Resistance

Twilio Stock Breaks Out to Test Key Resistance

By Justin Kuepper | August 8, 2017 — 6:29 PM EDT

Twilio Inc. (TWLO​) shares soared nearly 10% on Tuesday after the company reported better-than-expected second quarter financial results. While Twilio has struggled with its reliance on large customer accounts, management projected third quarter revenue of $91 million to $93 million – above consensus estimates of $89.69 million – while full-year revenue guidance of $371 million to $375 million exceeds consensus estimates calling for $359.79 million.

Second quarter revenue increased 48.6% to $95.87 million – beating consensus estimates by $9.63 million – and net losses of five cents per beat consensus estimates by six cents per share. Base revenue – excluding large customer accounts without a year-long minimum contract – jumped 55% to $87.6 million, while total active customer accounts reached 43,431 compared with just about 31,000 during the same time last year. (See also: Twilio In-Line Q2 Loss, Solid View Mitigate Uber Woes.)

Technical chart showing the performance of Twilio Inc. (TWLO) stock

From a technical standpoint, the stock broke out from reaction highs made in mid-July to key resistance levels near $35.00. The relative strength index (RSI) reached overbought levels at $71.07, while the moving average convergence divergence (MACD) could see a bullish crossover. The stock has been building momentum since its sharp decline following first quarter earnings, when it issued guidance that was well below expectations.

Traders should watch for a breakout from these key resistance levels to new highs. Over the past 52 weeks, the $35.00 level has been tested three times without a breakout following the stock’s tremendous decline during the middle of last year. The next major resistance after a breakout would be at around $39.00 per share, although a failure to break out could send shares back down to retest support at around $32.50. (For more, see: The Top IPOs of 2016.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

Published at Tue, 08 Aug 2017 22:29:00 +0000

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