Has Twilio Inc's (TWLO) Fire Run Out of Fuel?

Since cloud-based communications stock Twilio Inc (NYSE:TWLO) began trading publicly in late June, the shares have added an incredible 266% relative to the IPO price of $15, last spotted at $54.87. In fact, if the stock can merely stay in place over the next few weeks, it would tag the best three-month return of any major IPO in recent years by a mile -- though that's not always an indicator of future success. As it happens, TWLO seems to be running into technical trouble already.

The shares topped out at a high of $66.40 in mid-August, and have since been pulling back. Hitting a set of lower highs and lows, it looks like TWLO may be forming a descending triangle pattern. For now, the stock is holding above support at the round $50 level, which forms the bottom of this triangle, but should the shares drop below the half-century mark, a larger sell-off could be ahead.

Speaking of key technical levels, TWLO spent several weeks stuck beneath resistance at $45 in July. Finally breaking out above that speed bump in mid-August, the shares next found a roadblock around the round $60 level, which the stock still has yet to top on a closing basis. Potentially adding to the strength of resistance in this area is heavy call open interest at the September 60 and 65 strikes. An unwinding of the hedges related to these positions as front-month options expiration approaches could serve to pressure the stock lower.

While TWLO's life as a publicly traded company -- and an optionable stock -- has been short, speculators have taken a distinctly call-skewed approach so far. Over the past 10 days on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity has a seen 3.17 calls bought to open for every put.

Outside of the options pits, meanwhile, the sentiment picture is not so rosy. Short interest on TWLO has begun to climb, rising 5.4% during the most recent two-week reporting period, to account for more than 6% of the stock's total float. Analysts don't appear to be entirely on board, either. Of the five brokerage firms providing coverage, four give Twilio Inc (NYSE:TWLO) a lukewarm "hold" rating. Plus, the average 12-month price target sits at just $39 -- a significant discount to current levels.