A Look At Twilio Stock After Disappointing Guidance Hampers Q2 Earnings Beat

Twilio, Inc TWLO was plunged over 18% at one point on Friday after issuing third-quarter guidance that came in below estimates. The company’s outlook also prompted a number of analysts to downgrade and slash price targets on the stock.

The lowered price targets, which prior to Friday came in between $132 and $245, now come in between the $90 and $153 range.

The third-quarter guidance was issued on Thursday after the market close, when Twilio printed a second-quarter earnings beat. For the quarter, Twilio reported a net loss of 11 cents per share on revenues of $943.35 million, which came in ahead of the consensus estimate of a loss of 21 cents per share on revenues of $919.66 million.

For the third-quarter, the company said it expects to report a net loss of between 43 cents and 37 cents on revenues of between $965 million and $975 million.

On Friday, when Twilio fell to the $80 level, bulls came in and bought the dip, likely with the mindset that a sharp decline was an overreaction to the company’s news. The retracement could also serve as a higher low to confirm Twilio is now trading in an uptrend.

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The Twilio Chart: Twilio negated its downtrend on Aug. 3, when the stock printed a higher high above the most recent lower high, which was formed July 20 at $94.77. If Twilio continues to bounce up over the course of Monday, Friday’s low-of-day may serve as a higher low, which would confirm a new uptrend is in the works.

• Friday’s dip was bought on much higher-than-average bullish volume, which indicates there’s a high level of interest in the stock. At the time of writing, over 11.8 million Twilio shares had exchanged hands compared to the 10-day average of 3.7 million.
• When Twilio gapped down on Friday, the stock lost support at the eight-day and 21-day exponential moving averages (EMAs) and the 50-day simple moving average. Bullish traders will want to see Twilio regain the three levels as support in short order, otherwise they are likely to become heavy resistance.
• Twilio has resistance above at $86.45 and $93.47 and support below at $78.42 and $70.26.

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