Buying The Earnings Dip!
Post-earnings dips from Activision Blizzard (ATVI) & Twilio (TWLO) have presented us with a unique opportunity.
It’s been a crazy earnings season with some wild price action among individual stocks, presenting us with some unique entry opportunities amongst stocks that are oriented for the future. The two stocks I am focused on are Activision Blizzard ATVI and Twilio TWLO, who have finally come down to investible levels for a long-term buy and even just a short-term trade.
Activision Blizzard (ATVI)
Activision Blizzard (ATVI) is a gaming powerhouse, with a portfolio of leading games across genres and platforms, providing this profitable growth machine with a diverse customer base. The pandemic supplied this gaming giant with a massive tailwind which launched ATVI up 65% from its pre-COVID levels to its February high but has since fallen 35% from those levels as investors reassess its lofty valuations as global lockdowns abated.
Activision Blizzard’s Q3 report on Tuesday, November 2nd, added to this falling knife’s downward momentum following announced product delays of highly-anticipated Overwatch 2 and Diablo IV, which were expected to be big 2022 profit drivers. However, the enterprises mobile gaming segment offerings continue to keep its user base buoyant.
The long-term growth outlook for ATVI remains intact as it proves an ability to maintain monthly active users even as society enters a new normal. You can see its segment user breakdown and total monthly active user (MAU) performance over the past 3 year illustrated in the graph below.
ATVI bounced off its pre-pandemic high in post-earnings price action, which marked a bottom for this equity as its long-term outlook continues to look robust. The consensus target price among analysts is north of $100 a share, with more bullish targets sitting at $125, representing upsides of 47% & 85%, respectively.
Twilio (TWLO) is finally showing up on my radar of investible equities following its post-earnings capitulation, which drove the stock down near 30% and provided us with an excellent opportunity. The stock bounced off a strong Fib-derived support level around $277.5 (261.8% Fibonacci extension from July’s lows to highs) following its Q3 earnings and has since slingshotted off these levels as investors buy the dip.
Investors fear that they are giving TWLO, which remains an unprofitable growth story, an unjustifiably rich valuation multiple as its organic growth decelerates at a faster pace than expected. I still see this as a very strong long-term investment and trade today, with this deceleration being more a product of difficult year-over-year comps, than anything systemic.
I have been touting TWLO as a buy since it was trading below $100 prior to the pandemic, and today it has finally come down to a valuation I am once again comfortable purchasing at.
Twilio is a cutting-edge automation company that leverages artificial intelligence (AI) to help businesses provide the most effective customer service. Twilio's unmatched AI capabilities, embedded in its remarkable customer engagement platform, could mark the end of foreign call centers as we know it.
Twilio is a platform-as-a-service (PaaS) company that provides businesses with a cloud-based programming platform, aka application programming interface (API), for digitalized communication. This interface gives developers the ability to add voice communication, messaging, video, and communication-based security to any mobile application, website, or other digital platform.
Twilio's AI-powered PaaS is trusted by many enterprises that rely heavily on customer satisfaction for continued growth. Companies like Uber (UBER), Lyft (LYFT), Airbnb, DoorDash, Twitter (TWTR), and countless others depend on Twilio's smart platform to keep their customers happy.
There is a good chance that you have interacted with this exceptional PaaS at some point in your recent life. Twilio's capabilities are only going to improve, and its adaptation will continue to grow.
According to Twilio's most recent annual report, the cloud-based "platform serves over 180 countries today, making it as simple to communicate from São Paulo as it is from San Francisco". The company has over 250,000 active customer accounts, as of September 30th, 2021, more than quadrupling its clientele in less than 3 years.
20 out of 22 analysts are calling TWLO a buy today, with price targets sitting around $500 per share, representing an over 60% upside from where it's trading today even after its crazy drive this year.
Don't Miss Out
Don't miss out on these excellent buying opportunities for market-disrupting stocks that are likely to continue driving robust capital returns through the roaring 20s. I know this is something you continue to hear in these highly unprecedented market conditions but Buy The Dip.
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Activision Blizzard, Inc (ATVI): Free Stock Analysis Report
Twilio Inc. (TWLO): Free Stock Analysis Report
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