What happened

Shares of email mass-mailer SendGrid (SEND) shot up 35% by 3 p.m. EST Wednesday. This being earnings season, you may surmise that the reason was "earnings." You'd be right -- unless you thought it was SendGrid's earnings that were behind its surge.

The fact is, SendGrid did report earnings last night and did quite well. Sales were up 31% year over year and an improved gross margin helped to cut SendGrid's per-share loss by three-quarters compared to last year's Q3.

Two twins pointing at each other

For the foreseeable future, you can expect SendGrid and Twilio to trade as twins. Image source: Getty Images.

So what

But so what? As you may have heard by now, SendGrid rival Twilio (TWLO 1.36%) agreed to buy SendGrid just last month in what was then a $2 billion takeover deal. That makes SendGrid's Q3 performance more or less irrelevant to its shareholders. More important is the fact that when Twilio agreed to buy SendGrid, it agreed to buy it not for cash, but for shares.

Specifically, Twilio agreed to exchange 0.485 of its own shares for each share of SendGrid then outstanding. In so doing, Twilio essentially tied the value of SendGrid to the value of Twilio's shares. And so, when Twilio's shares soared 35% today in reaction to its earnings news -- a slightly widened loss but a 68% increase in sales -- this naturally pulled SendGrid's stock price up with Twilio's.

Now what

Of course, what goes up can come back down again, and this creates some risk for SendGrid shareholders. In its SEC filing describing the SendGrid acquisition, Twilio noted that it's targeting a closing date for the purchase of no earlier than "the first half of 2019" -- meaning closing could be more than six months away.

That's six more months of waiting, during which time SendGrid's shares could continue to rise along with Twilio's -- or fall with them if Twilio should disappoint investors in some manner. In that regard, Twilio's latest guidance is for sales of $183 million to $185 million in Q4 and pro forma profits of between $0.03 and $0.04 per share.

SendGrid shareholders should really hope Twilio hits those numbers.