Category: Research Reports

Tesla divides believers and skeptics

Tesla divides believers and skeptics.

The market is split between believers and skeptics.

Those who believe that Tesla’s value is limitless and those who are more pessimistic about its prospects, especially given its current market price.

The company’s progress so far in “accelerating the world’s transition to sustainable energy” is a credit to Tesla. Still, there is a lot more left to do in its master plan to justify today’s valuation.

Tesla’s history of executing many of its audacious goals seems to be expected to continue, given the optimism in the current stock price. This gives the company very little room for error.


Investors Are Giving Tesla A Lot Of Credit For Future Execution

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Tesla (NASDAQ: TSLA) is easily one of the most controversial companies in the world right now. Most either love it or hate it. These two groups seem to be split into those who owned it through 2020 and those who watched on the sidelines as the price multiplied 10-fold.

What’s undeniable is that Tesla is working on some exciting innovations in the world’s transition to sustainable energy. The company’s grand ambitions for electric vehicles, autonomous driving, battery design, energy storage, and energy generation have contributed to the widely differing opinions on the business’ future. Some believe its plans are possible, while others are skeptical.

Let’s look at where Tesla is today versus its future expectations, plus what it needs to do to get there.

  • Tesla is in the early days of its ambitious plan.
  • Perfect execution is needed to reach its bold targets.
  • If any doubt arises about its ability to execute, the stock will re-rate downwards significantly.

Tesla Today Versus Tesla In The Future

Tesla currently generates revenue through 3 sources: automotive sales and leasing, energy generation and storage, and services.

The automotive business generated 97.2% of total revenue while energy generation and services contributed .7% combined during the 2020 financial year.

To understand the expectations related to Tesla’s future, we need to understand where the company is now versus where it is expected to be in, say, 10 years.

In 2020 Tesla did the following :

Production Deliveries
Model S/X 54,805 57,039
Model 3/Y 454,932 442,511
Total 509,737 499,550

In 2020, the company delivered half a million in vehicle sales and generated $27.23bn in revenue (sales and leasing combined). This is a 30% increase over 2019’s automotive revenue.

Years ago, in 2016, Tesla brought in $7 billion in total revenue, while in 2020, it brought in $31.54 billion while its earnings per share went from -.94 to now a positive .64, a 350% and 168% increase.


The company earns tradable regulatory credits because it operates under regulations related to zero-emission vehicles and clean fuel. It sells these credits to other carmakers who want to comply with the regulations and avoid fines because Tesla doesn’t need them. The CFO stated in an earnings call that demand for these credits would remain strong for the next few years. Still, as electric vehicles become more mainstream and other manufacturers also begin complying with the regulations through their own operations, earnings from these credits’ sales will decline.

Regarding future expectations for the automotive side, Tesla’s CEO, Elon Musk, stated the company plans to produce 20 million cars per year by 2030. That may sound audacious, and it is. But in 2014 (when it sold around 32k cars), Tesla said that it planned to sell 500k cars by 2020, which also seemed audacious, but it did it.

So to put that 20m into perspective, here are a few numbers. That means Tesla needs to increase its current production by 40x (a 44% CAGR). It needs to double what Volkswagen and Toyota (the two biggest carmakers currently) sold in 2020, which was 9.35 million and 9.5m cars, respectively. Plus, market forecasts from Deloitte and Bloomberg New Energy Finance’s likes expect the number of electric cars sold annually to be around 25m in the year 2030. So if true, this implies that Tesla would have an 80% share of the electric vehicle market in 2030, compared to its current 18% in 2020 (it was the market leader in 2020). Tesla is overly optimistic, or the industry forecasts underestimate electric vehicles’ total adoption in 10 years.

Considering that the company generated 43% YoY growth in cars produced from 2018 to 2020, it will need to continue expanding its production capabilities aggressively to continue this growth rate. Achieving this growth will rely heavily on three things: first, an improvement in the company’s capital efficiency (continual reduction in production costs), second, the successful creation of many new factories around the world to support production, and third, widespread adoption of Tesla’s Full Self-Driving (FSD) technology (if the software is successful). We will touch more on these points later.

Regarding Tesla’s energy generation and storage business, it deployed 3.02 Gigawatt hours of energy storage products and 205 megawatts of solar energy in 2020.

At Tesla’s recent Battery Day, Musk announced plans to get to 3 Terawatt hours (TWh) per year in batteries by 2030, a 1000x increase from its current installations.

Considering Bloomberg NEF predicts that energy storage installations around the world will reach 1.1TWh to 2.8TWh by the year 2040, it appears there are some big discrepancies. Tesla’s forecasted energy installations in 2030 would be more than 100% of what BloombergNEF forecasts for the entire world’s installations.

Again, either Tesla is optimistic, or industry forecasts are underestimating the growth of global battery installations.

How will Tesla Reach These Bold Targets?

These bold predictions from Tesla seem vastly different from what some market research by other firms suggests will occur. Regardless, to achieve what it’s claiming is possible, a few things need to occur.

1. Tesla Needs To Spend Big

To build more factories in its automotive and energy businesses, Tesla will need to spend money and lots of it. The company had $19.38bn of cash at the end of 2020 (after raising $10bn via equity in the second half of 2020, which was 2% dilutive), generated $5.9bn cash flow from operations, and spent $3.16bn of that on capital expenditures for the year. For 2021, 2022, and 2023, Tesla expects to spend between $4.5bn and $6bn on capital expenditures per year (page 33 of the 2020 annual report). Some forecasts suggest that Tesla will need somewhere between 20 to 40 new gigafactories to reach its goals by 2030, which could cost anywhere between $32bn and $64bn over the next 10 years (if we use the $1.6bn cost of the Shanghai factory). Yearly, that would equate to between $3.2bn and $6.4bn of capital expenditure over the next 10 years. Given the current cash flow from operations and the high cash balance, this seems affordable, at least for the next few years.

Here’s an outline of the company debt to equity situation since 2014 from our company report.

Source: Debt to Equity History and Analysis – Simply Wall St


2. Tesla’s FSD Software Needs to Win

Tesla FSD software is up against almost every other company in the space (e.g., Waymo, GM, Toyota), using LIDAR technology. It’s beyond my current capabilities to outline the technological differences between the two (and they are significant), but what is important to keep in mind is that neither are at full level 5 autonomy just yet. This means both systems are yet to prove they have the capabilities for full autonomy without a human driver.

However, while Tesla’s FSD software is reportedly only at level 2 autonomy, it claims it will be at level 5 (i.e., fully autonomous) by the end of 2021. This could be since it has accrued somewhere in the range of 3 billion miles of data from its fleet of cars on the road to building its FSD software. This is significantly more data than its competitors. So if that software comes to market successfully at the end of this year like the company plans, that would provide more substantial evidence that supports Tesla’s case for being the market leader in autonomous driving software and driving its potential exponential growth. Not only that, the software would provide a very high margin source of recurring revenue. But again, that’s yet to happen, and if it does experience any hiccups in the process, it could be incredibly damaging. So execution is key.

3. Tesla Needs To Continue Improving Capital Efficiency

In the manufacturing business, capital efficiency is key to growing production rapidly and affordably. Ark Invest, one of the most widely known bulls on Tesla (Ark owns around $3.7bn of Tesla across its ETFs), believes there is a 50/50 chance Tesla will be more capital efficient than traditional US auto-makers. The Bureau of Economic Analysis showed that traditional US automakers spent $14k per car on fixed assets in 2016. For reference, the Tesla Shanghai factory-required $1.6bn in financing with an initial capacity of 150,000 cars, meaning it costs $10,700 per car (Shanghai recently reached 8k cars per week and expects to produce 550k cars in 2021). To grow rapidly and affordably and enable this growth required to get to 20m cars by 2030, Tesla needs to continue to improve its efficiencies and productivity even further with its future factories.

The thing here is that it seems a lot of Tesla’s current market price is counting on the successful execution of these future events playing out. The CEO even noted this to employees in an internal letter in 2020. The expectations of exponential growth rely on simultaneously expanding production capabilities, increasing productivity, and successfully delivering FSD software to market. The company has a track record of executing, but if any doubt arises from investors about their ability to further execute, it would be incredibly damaging to the stock price.

What This Means For Investors

While Tesla seems to still be in the early days of its ambitious plans, the stock’s current market valuation seems to largely expect that all of these developments occur, even though they’re likely years away and not guaranteed. The huge share price increase in 2020 versus more conservative growth in the actual business indicates that a lot of the rise was due to increasing expectations that the company would successfully execute. As investors, we need to assess a range of possible future outcomes, assess the probability of each outcome occurring, and estimate the potential risk-reward that comes with each outcome playing out.

There’s a saying from Charlie Munger that goes, “No matter how wonderful a business is, it’s not worth an infinite price.” It’s up to us as investors to determine what an appropriate price is.

How to trade Tesla : 

On the overall 2hour, 360-day time frame, Tesla’s technical analysis reads bearish with more downside to come.

The 14-day simple moving average is now well below the 30-day simple moving average.

As a result, we now see more downside for tesla to come in the near future.

As a day trader and an option trader, we would be looking to buy $550 or $500 puts if this downward trend were to continue.

The price target will be $566.77 and then $533

Join our discord to see more real-time analysis.  


Tesla’s weight in SPDR S&P 500 ETF Trust, SPY, has led the stock market to retrace back down towards the $370 price level.

Price action has led to many stating that the stock market is crashing.

But to be honest, we have not seen a market crash yet.

Tiger Wolf Capital owner Frank Mercado wrote this article is general in nature. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Penn National Gaming Inc (PENN), January 9th, 2021


Ticker: PENN

Last Trade Price: $93.75

Short Term Rating: Hold

Long Term Rating: Buy

Price Objective: $110

Business Strategy and Outlook

Penn is in a unique position moving into 2021. They currently are in a place of high growth opportunity. Sportsbooks in October had a YOY increase of $279.7M (80.8%), and iGaming had a YOY increase of $156M (209.5%). For the 10 Month YOY change, the sportsbook vertical grew $957.6M or 39.1%, and the iGaming vertical had increased by $1.23B or (206.2%). Penn Gaming has a strong foothold in the online casino/sportsbooks, along with established casinos. The majority of Penn’s revenue derives from having Brick-and-Mortar casinos that provide in-person Gaming. Penn is looking to create an omnichannel synergy with the making of the Barstool Sportsbook and online gambling. The recent surge of online sportsbooks such as Fanduel and DraftKings has created a new market space for other casinos to develop their apps for people to place bets legally. Penn’s business strategy focuses on two major segments –Gaming and Hospitality (Food, Beverage, hotels).

The key driver to Penn’s revenue is Gaming (Gambling); they are a casino company, and Gaming has made up 81% of their income for the last two years. The Gaming segment has evolved after the forced shutdowns of Brick-and-Mortar Casinos due to Covid-19.

Online sportsbooks such as FanDuel and Draftkings have a stronghold of the online market. However, Barstool Sportsbook’s recent creation has allowed Penn to sit at the table and take over some market share. The value that Barstool brings to Penn is immense. Barstool’s fanbase brings 66M Unique Monthly visitors to the table, a built-in audience that other casinos cannot compete with. Not only does the number of visitors provide a massive boost, but there is a little crossover of users from Penn Casinos and the Barstool audience. Traditional casinos tend to draw an older audience, while Barstools’ audience is dominant in the 18-35 years old range.


(Penn – Barstool Investment Presentation)



A significant market has begun to emerge with the states continually passing legal sports betting and companies trying to take hold of each market segmentation. Fifteen states currently have legalized online sportsbooks, and an additional five more states have approved in-person sportsbooks. It also depicts 14 states may have legal sports betting pass within the next two years. Penn can take a stake in a market that is growing in front of them.

What Barstool provides Penn that other Casinos lack is a sizeable natural audience. Other online sportsbooks and even Brick-and-Mortar casinos have to spend millions of dollars in marketing to drive users to their product. Marketing is one of the largest expenses that Fanduel and Draftkings have on their income statement, and Penn has managed to reduce the to remove that cost off of their income statement nearly completely. We will look into the 10Q reports of Draftkings (Online Sportsbook) and the MGM Casinos (Brick-and-Mortar) to dive into their marketing budget and compare them to Penn national. The two spreadsheets show a massive investment in the marketing/advertisement portion of their business. In Q3, Draftkings spent over $203M in marketing to reach new consumers in these emerging markets. While MGM in 2019 spent $257M in advertising as they have established brand recognition and have established market share of their casinos. In Penn Gaming’s Q3-10Q, they announced that their advertising/marketing budget would be $17.5M, of which $16.3M will be for the “long-term,” meaning that they are allocating $1.2M in the short term. Penn has spent less than 0.5% of MGM’s marketing budget and less than .6% of the marketing budget of Draftkings.

We anticipate many states will begin to legalize sports gambling soon, and an emerging market will appear. We also expect Draftkings to increase spending on marketing on a national scale rather than local to draw as large of an audience as possible. While on the other hand, Penn has already opened legal Sportsbooks in one state (Pennsylvania) and is looking to move into Michigan next. Instead of focusing on taking over already established markets, Penn is looking to proceed on states that have recently passed legal sports betting. This strategy will allow Penn to take a larger market share and secure non-affiliated gamblers instead of converting gamblers who are already committed to another company.

Penn’s Hospitality portion of the business makes up the remaining 19% of its revenue. The quarterly reports show that the Hospitality segment has faced significant revenue loss, which will continue into 2021.

Another issue, along with Hospitality revenue, is that Penn does not own all of its casinos. Real Estate Investment trusts own these buildings and rent them back out to Penn. Having fixed assets like this can be essential and paying rent can be detrimental to keeping afloat. On the other side of this, having a large debt structure when property values are depreciating can cause Penn to go bankrupt. The largest regional casino REIT owns Penn properties, and their reported data show that even in a time of little revenue, the casino segment was able to pay nearly all the rent due. Penn has decreased its long-term liabilities throughout 2020 in the form of paying off its rent. This allows DraftKings and FanDuel to be tied to long-term lease liabilities as their expansion is linked to their app.

Casino Segmentation

As depicted in the Pie Chart, over half of Penn’s revenue is from the Northeast segment. With Covid-19 cases increasing daily, the Casinos have faced the strictest Covid guidelines. We will look into the 10K report in February to confirm this trend. If the Northeast continues to implement strict Covid-19 guidelines, they will have to rely on their other regional segments to generate revenue. Fortunately for Penn, the acquisition of Barstool has allowed them not solely to rely on casino operations.

Performance and Risk

Tiger Wolf Capital focuses on two things: is this company profitable? Do people want to buy their product?

After taking a close look into PENN’s 10Q report, we see that the company is operating at a significant loss for the nine months of 2020. As a result of the forced shutdown of all Casinos, a substantial reduction in revenues, operating margins, and cash flows were inevitable. In the first nine months of 2020, Penn reported an increase in long-term debt of 34% since December 31st, 2019.

In Q2 of 2020 and for some part of Q3, Penn has had to pivot to online apps and iGaming. However, The Q3-10Q shows Operating Income to be positive $196.2M, which is an excellent sign that they successfully lateral their business segment. This reveals that Penn was able to bring back its pre-pandemic revenue during the pandemic. They could do this by maintaining their operating expanse low and increasing their sale in their iGaming Division. Penn realized a gain of $68 million in Q3 of iGaming and online sportsbooks, which is a significant increase as for the nine months of 2020, the real growth was $75.5 million.

Moving forward in 2021, as travel restrictions loosen up, we anticipate an average return in revenue for their Brick-and-Mortar casinos. We also do not see iGaming becoming an internal competition against their Brick-and-Mortar casinos, but rather a compliment, just as online sales have not taken away from in-person sales for retail stores. With the Covid-19 vaccine’s approval, Penn’s Gaming and Hospitality segment should heavily rebound to pre Covid-19 levels and beyond. We will keep a close watch on the 10K to confirm that the trend is continuing upward.


We find it interesting that in looking at revenue segmentation, we can see that the Hospitality segment has gained a more significant revenue share since 2014. Referring to our initial statement, we focus on if people want Penn Gaming’s product; the results speak for themselves. Over 60 thousand people downloaded the Barstool Sportsbook app from September 18th to October 29th, and it was the #1 sports app nationwide. The demand for the product is there, and the revenue nationwide will soon follow. They had a total handle of $78M from only one month and one state of legal sports betting. When Penn Gaming releases their 10K presentation, we will look for a continued positive trend of downloads and total wagers. What Barstool brings to the online sportsbook is a unique personality and engaging experience. Users have drawn to these personalities and will follow along with their bets.

Another issue that investors tend to see is that online sportsbooks will lower the total amount of in-person wagers and that total revenue will decline. We have gone through the New Jersey Department of Gaming to look at the trends of in-person Gaming and iGaming to observe their correlation. As you can see, the Casino shutdowns caused a slight spike in internet winnings, but the re-opening did not impact online wagers. This is a positive sign for Penn. Moving forward, they will be able to receive revenue streams from their Brick-and-Mortar establishments along with the Barstool Sportsbook app. Penn Gaming will now be able to synergize their sportsbook and provide a younger audience into the Retail table/slot gaming experience. An omnichannel synergy of Barstools’ younger audience and Penn Gaming’s established casinos will give a massive boost.

Technical Analysis

The levels to watch are $93.66 and $87.86

Currently, $PENN is trading at $88.31. PENN has used the 14 Day SMA as support since November 23rd and has retested this moving average as support several times. Last week, Penn had fallen below the 14-Day SMA and used the 30-Day SMA as support for the previous two days. With recent positive news Penn has rebounded above the 14-Day SMA and will begin to use this level as support. We will keep watch of the $87.86 level for support and buy call options to the $93.66 level; if we can break this resistance, we can hold the calls to retest the all-time high.

The case for the bear:

We see the stock price potentially retest the 14-Day SMA as it did previously. At that point, if it does not hold this moving average, we can begin to short to the 30-Day SMA at $78.49. If the 30-Day SMA does not hold support, we can keep a short position until we can find another support level at $72.70.

$BA – The Boeing Company – 2020 Research

Last Trade Price: $168.08

Short Term Rating: Sell

Long Term Rating: Buy

Price Objective: $214.95



Business Strategy and Outlook

Boeing is a leader in aviation, aerospace, and defense technology supporting airlines. Boeing derives its business off four segments: Commercial Airplanes, Defense/Space & Security, Global Services, & Boeing Capital. Boeing is a global leader in design, development, manufacturing, sale, and support of commercial jets, military aircrafts, satellites, missile defense, and space services. They are one of the only two manufacturers of 100+ seat airplanes and is one of the largest defense contractors in the U.S. The other major airplane maker in this category is Airbus.

Boeing’s business strategy is based off its core businesses – Commercial Airplanes, Defense & Space, and Global Services. Sales of Commercial Airplanes make up 42% of all revenue. Boeing has fixed-price contracts with the commercial airline companies and these contracts depend heavily on a healthy production and supply chain.

The other key segment in Boeing’s Core business strategy is Government Defense and Space contracts. This segment makes up over 34% of Boeing’s current revenue and has allowed them to stay afloat in the midst of the pandemic. These long-term contracts have allowed Boeing to operate while losing money. Boeing features numerous defense products that are constantly being contracted out to the Department of Defense. A key feature for this business segment is the research and development of new defense products to be bought by the Government. Boeing is on the leading edge of development for new defense products.

Product Line:

Commercial Airplanes Defense/Space
Next-Gen 737 F/A-18 E/F Super Hornet
737 MAX* F-15 Programs
747-8(F) P-8 Programs
767(F) KC-46A Tanker
777(F) T-7A Red Hawk
777X CH-47 Chinook
787 AH-64 Apache
Business Jets V-22 Osprey
*(F)Freight Planes Unmanned vehicle MQ-25 & QF-16
NASA’s Space Launch System

Performance and Risk

Tiger Wolf Capital focuses on two things: is this company profitable? Do people want to buy their product?

After taking a close look into the 10Q report of Boeing, we see that the company is operating at a significant loss. After two fatal crashes, Federal Aviation Administration (FAA) has forced the grounding of the 737 MAX, which made up 59% of Boeing’s Commercial Airline revenue back in 2019. As a direct result, Boeing faces risks include uncertainty in regulatory approvals on the return of their 737 MAX, a decrease in planned production, increased costs, and a decrease in supply chain health. The grounding of these planes has resulted in a significant reduction in their revenues, operating margins, and cash flows. In 2019, Boeing reported a 24% decrease in revenue from its prior year. Until FAA approves the return of the 737 MAX, we foresee Boeing to continue to loss growth in its year over year revenue growth.



As a direct result of COVID-19, global demand for travel as severally dropped. This is extremely concerning as Commercial Airlines make up 42% of their revenue and clients such as American Airlines, South West, and United Airlines are currently furloughing thousands of employees due to lack of demand in flights. As a result of this, the production of all their products have either slowed down or have completed been halted until 2021 / 2022. Shutting down factories in Q2, a lack of demand for new planes due to the travel ban, and massive losses from commercial airlines cancelling orders. Boeing revenue from this segment has dropped 78% since December of 2019 from December 2019.

Boeing’s defense segment has been healthy year over year and is only down -1% since December of 2019 from December 2018. Boeing was able to continuously add more Department of Defense (DoD) contracts and prop up the commercial segment of the business. Boeing’s Defense segment is very susceptible to changes in the defense spending budget. At any point with a change in defense spending the U.S. government can terminate or curtail Boeing’s contracts. Under President Trump, defense spending has continued to increase which has been extremely beneficial to Boeing. We believe that the Q3 earnings report should have a positive increase in the defense segment with the re-opening of factories and signing of new contracts.



By looking at both segments, we determine until Boeing receives approval on the 737 MAX and a continued low amount of travel, Boeing will continue to not be profitable. The increase in government spending on defense will unfortunately not offset the massive decrease in demand for commercial planes. In Boeing annual report from January 2020, we see that its total revenue has dropped 25% year over year.

Technical Analysis



The levels to watch are $144.46 and $171.39

Currently $BA is trading at $168.08. We seem to have found support around the Fibonacci level $144.46 and did quick bounce upwards towards $171.39.  I recent days, this $169 – $171.39 have proven to be an extraordinarily strong resistance level for this stock and we have not seen any change in this. We will remain bearish on $BA until we can effectively get above and hold above $171.39. Every time we get near this $171 level, we will short the stock by buying weekly put options and target $160 / 162 and then reevaluate. We believe that BA will bounce up once we hit the low $160s and give us another entry to short it once it hits $170 again. Fail to hold the $160 level, we see $BA pulling down towards $145.

The case for the bulls:

We are witnessing the 14-day and the 30-day simple moving average curl upwards as $BA continues to retest this $171.39 level. We would anticipate the 14-day moving average to cross above the 30 day, this will make the trend bullish and once we get above $171.5 we should see a fast move towards the upside. We anticipate the company to be trading at $188-$214 soon.


$TWLO – Twilio Inc. – 2020 Research

Last Trade Price: $238.40

Price Objective: $305


Business Strategy and Outlook

Twilio is a communication platform as a service, which developers can use to facilitate communication (text,voice) in 180 countries. CPaaS platforms provide the building blocks that enable individuals or enterprises to integrate real-time omnichannel communication tools into business applications. Twilio operates as the back-end communications infrastructure for companies and provides easy to use APIs and SDKs to allow integration with a customer’s applications. Simple examples of such integrations include enabling two factors authentication for a website or enabling push notification to remind customers about upcoming events.

Twilio Flex streamlines businesses to client communication through the power of AI and cloud-based services.  By using Ominchannel customer services, Twilio enables businesses to connect with their clients through WhatApp, SMS, or WebChat, powered by automated routine customer inquires with conversational IVRS and chat box to reduce wait. We see great value and long-term growth potential for this product as more companies are switching over to remote workplaces and the need to provide greater customer satisfaction and increase brand loyalty are essential.

Earlier this year, Twilio acquired SendGrid that allow customers send mass emails to their clients. We believe this platform was the missing link in Twilio’s communications tools and should drive material cross-selling opportunities. SendGrid brings another layer of marketing and communication to Twilio’s arsenal.

Product Line:

Twilio Flex

Programmable SMS

Elastic SIP Trucking

Twilio Conversations

Programmable Vide

Phone Numbers

Twilio SendGrid Email API

Programable Voice

Programmable Wireless 


Performance and Risk

At Tiger Wolf Capital, we look at two things: is the company profitable? Do people want to use this product.

As of Q2 earnings earlier this year, Twilio is not a profitable company due to their cost of operation being too extraordinary high. One of the biggest concerns is that Twilio relies on network service providers and internet service providers to be able to provide their services. Twilio is currently at the mercy of these companies and must pay whatever fee that they are charged. At times, network service providers have instituted additional fees due to regulatory, competitive or other industry related changes that increase Twilio’s network costs. As well, network service and connectivity and disruption or deterioration in the quality of these services could adversely affect Twilio’s business, results of operations and financial condition. On the other hand, the company’s total revenue as increased year over year with a 46% increase from Q2 of 2019 to Q2 of 2020. For us, this looks promising if Twilio is able to keep the cost under control and increase their operating margin.

Answering our second question, Twilio’s customer growth has been growing immensely year over year. Most notable gain is the growth from 2018 to 2019 when it from having 64,286 customers to 114,714. The demand for Twilios’ service is very evident and should not be overlooked.

We are looking forward to seeing what Q3 earnings will tell us about it performance during the pandemic.

Techincal Analysis :

After recently selling off, TWLO has found support around $218.26 and has recovered back up to $242.61. We are closely monitoring how price action well develop in the upcoming days as earnings is scheduled to be released on November 4th. We anticipate that price will run up higher if and when we get above the $250. Once we get above $250, we will go ahead and begin to target $266.95, $282, and finally $305.

$QQQ – Invesco QQQ ETF – 2020 Research

Rating: Sell

Target Price: $240

Business Strategy & Outlook:

The Invesco QQQ, or better known as QQQ, is an exchange-trade fund based on the Nasdaq-100 Index. The Fund will, under most circumstances, consist of all stocks in the Index. The index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization.

The top holdings for this ETF are Apple, Microsoft, Amazon, Facebook, Alphabet, Intel, Nvidia, Adobe, and PayPal. In recent days all of these names have had nice run towards the upside and have recovered all their losses from COVID 19 sell off. On average, these names have led the QQQ to be up 39% YTD after being up 62% two weeks prior.


Credit Updates:

For the three and six months that ended on June 30, 2020 and June 30, 2019, Square had no customer that accounted for greater than 10% of total net revenue.

As of June 30, 2020, they had an accumulated deficit of $627.7 million.

Technical Analysis: as of September 17, 2020


Using the 2-hour time frame, SQ has pulled back recently with the overall market. We reached a new all time high of $170.61 and pulling back down towards key support level $145. We are looking to see if we can hold this support level with secondary support at $140. We are seeking to be a buyer soon if we can maintain support levels. We seek to enter around the $145 / 140 level and start selling around $155 / 160 / 170 levels.


$SQ – Square, Inc. – 2020 Research

Rating: Buy

Target Price: $170

Key Ratios:

EPS:  .18

P/E:  238

Debt/ Market Cap:  4.18%


Business Strategy & Outlook:

Since 2009, we believe Square has found its niche by attracting micro merchants and providing a product that is reliable and affordable for the average small business.  From a scalability standpoint, Square is basing its success on future growth and the ability to retain existing sellers.

In 2017, 2018, and 2020, Square has generated significant net losses, with an accumulated deficit of $627.7 million as of June 30,2020. We believe Square is making investments in their employees, sales & marketing, and research and development, to attract new or larger sellers which may be key to higher revenue streams and market share.

We predict Square’s revenue to rise 60% YOY, as they are making significant measures to increased diversity in their revenue base.  Square’s Bitcoin revenue for 2020 June 30th six months ended has grown 520% compared to the same period in 2019, with hardware revenues remaining the same, subscription-based revenue increasing 37% and transaction-based revenue increasing only .6%.

Seeing that their debt load is only 4.18% of their market cap, we are putting a buy rating on SQ, with a price target of $170.


Credit Updates:

For the three and six months that ended on June 30, 2020 and June 30, 2019, Square had no customer that accounted for greater than 10% of total net revenue.
As of June 30, 2020, they had an accumulated deficit of $627.7 million.


Products and Services:

  • Software product offerings include
  • Square for Restaurants
  • Square Point of Sale
  • Square Appointments
  • Square for Retail
  • Square Invoices
  • Square Virtual Terminal
  • Square Dashboard Weebly
  • Square Loyalty & Marketing
  • Square Payroll

Hardware product offerings

  • Magstripe Reader
  • Contactless Chip Reader
  • Square Stand
  • Square Register
  • Square Terminal




Technical Analysis: as of September 17, 2020

Using the 2-hour time frame, SQ has pulled back recently with the overall market. We reached a new all time high of $170.61 and pulling back down towards key support level $145. We are looking to see if we can hold this support level with secondary support at $140. We are seeking to be a buyer soon if we can maintain support levels. We seek to enter around the $145 / 140 level and start selling around $155 / 160 / 170 levels.


$GOOGL – Alphabet Inc. – 2020 Research

Current Price: $1,487.04


Company Description

Alphabet is a global technology company focused around the following key areas: advertising, operating systems and platforms, enterprise and hardware products. Alphabet generates revenue primarily by delivering online advertising and by selling apps and contents on Google. The Company provides its products and services in more than 100 languages and in 190 countries, regions, and territories.


Investment Rationale

Alphabet is well positioned long-term with leading search technology, Android and YouTube. Alphabet is also an advertising industry leader and the company should generate incremental revenue growth from increasing mobile usage, video usage, Google Play activity, and connected device activity (including autos). We believe Google should trade at a premium to its peer group given shareholder friendly actions (buy backs and disclosures) and new product catalysts


Outlook on Google:

  • Alphabet’s focus lately has been on ad revenue growth and cloud computing services.
  • Alphabet reported total revenue of $41.2 billion, up 13% year over year, helped by growth in advertising (10%) and cloud (52%).
  • The company reported $29.95 billion in advertising revenue in 2019, a 26.1% increase from the previous year.
  • Youtube Ad revenue growth came into light in the 2nd quarter, while cloud computing revenue growth has slowed compared to the previous quarter due to not being able to gain market share from key players like Amazon and Microsoft.
  • The company has applied machine learning to its Google App (speech recognition), Gmail (Smart Reply), Google Photos, Maps, and many other products, including its cloud offerings.



Price Target:

We believe Google has a way up to go and has a fair value of around $1,700. Since Alphabet dominates the online search market with Google’s global share above 80%, we believe their cloud services will continue to grow through that and that they are an attractive buy.


Technical Analysis

As of September 17, 2020 GOOGL, as retracted back to our Fibonacci support level of $1,493 after hitting an all time high of $1,726.1.

In our view this pull back is not alarming, but rather a healthy pull back that was bound to happen in the overall market especially with the tech sector being such a dominant force the past 3 months.

We are currently watching the 14-day and 30-day simple moving average curve downward, indicating more potential downside lurks on the horizon. We are anticipating a pull back towards $1,439, which will present to be buying opportunity if support levels hold.


We will be looking to be buying around this price level, but if support does not hold we will be short selling and targeting $1386.