As a specialist in communication application programming interfaces (APIs), Twilio (NYSE:TWLO) is an incredibly relevant organization. Very briefly, a third-party communication API standardizes all communication requests both internally and externally for a client company’s ecosystem. Without this innovation, individual companies would have to develop their communication matrices, quickly becoming onerous and costly. Not surprisingly, TWLO stock has soared over the years as organizations have shifted toward digital interfaces.
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Further, the novel coronavirus pandemic has truly accelerated the demand for such third-party solutions. When the Covid-19 crisis shut down the nation, people frantically placed communication requests for various reasons. By having an integrated, always-ready platform, companies could serve their clients during this unprecedented emergency. Indeed, consumers can easily recognize organizations that have incorporated services like Twilio against those that have yet to integrate communication APIs.
Moving forward, that fact alone may play a pivotal role in how disrupted businesses recover (or not). Again, it’s not surprising that TWLO stock has jumped higher this year. From the ability to deliver automated communications to facilitate contactless deliveries, to providing a platform bridging patients with medical professionals for telehealth applications, Twilio has been a source of stability during this crisis.
Better yet for proponents of TWLO stock, the bullish catalysts are showing up in the numbers. For Twilio’s second quarter of 2020 earnings report, it delivered 9 cents per share on revenue of $400.8 million, up 46% from Q2 2019’s sales of $275 million. Remarkably, Wall Street expected a loss of 9 cents a share on revenue of $368.23 million.
Clearly, Twilio is firing on all cylinders. Beyond the pandemic, the technology firm has one critical catalyst that shouldn’t be ignored.
Cryptocurrencies Could Play a Factor for TWLO Stock
If you’ve read my work in the past, you know that I’m a big proponent of cryptocurrencies. For the first time, we have true democratization in the financial and investment realm. Primarily, the mechanism of supply and demand is handled via public consensus, not a centralized authority like a bank.
Further, the inherent trust built into the underlying blockchain architecture enables freedom of engagement within the broader cryptocurrency ecosystem. In other words, people can trade cryptocurrencies from practically anywhere in the world, so long as internet access is available. Though government entities may try to artificially control this innovation, technology usually has a way of forging its own path.
Such democratization appeals to millennial investors, which is partly why cryptocurrencies have taken off. However, this demand necessitates enhanced security protocols. Currently, the standard for access authorization is two-factor authentication or 2FA.
Though the technology to develop 2FA is complicated, for the end user, it’s very simple: just download an app into your smartphone and you’re good to go. With 2FA, users have an additional layer of protection beyond a password for account verification and protection.
However, transferring the 2FA from an old device to a new one can be a frustrating endeavor. That’s because popular 2FA providers don’t support multi-device functionality. Furthermore, what happens if a user loses the phone to which a 2FA app is installed?
Because many 2FA providers lack encrypted recovery backups, you are “SOL.” I’ll let you look up what that means.
However, Twilio’s 2FA is vastly superior in that it provides recovery mechanisms in case something happens to the primary 2FA-armed device. As the cryptocurrency narrative becomes mainstreamed, the critical importance of this functionality should help boost TWLO stock.
A Buy on the Dips Opportunity
While TWLO stock offers investors viable upside channels, I’d like to emphasize that this is a buy on the dips opportunity, not a buy right now one. Presently, shares may be stretched. For the month, shares are down more than 5% despite encouraging Q2 results. That signals that Wall Street is looking for more and not getting it.
With how much TWLO stock has leapt, I wouldn’t be surprised if shares corrected.
But if they do, you should consider grabbing the discount. A correction would be nothing more than a healthy rebalancing act for the next leg higher. Further, the cryptocurrency narrative mentioned above will take time to materialize.
In the meantime, save your opportunity cost by looking at names that are immediately viable. Once TWLO corrects, you’ll be in a best of both worlds position.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. As of this writing, Matt did not hold a position in any of the aforementioned securities.