Stock of the Day

February 17, 2021

Cloudflare (NET)

$151.83
-$4.55 (-2.9%)
Market Cap: $53.67B

About Cloudflare

Cloudflare, Inc. operates as a cloud services provider that delivers a range of services to businesses worldwide. The company provides an integrated cloud-based security solution to secure a range of combination of platforms, including public cloud, private cloud, on-premise, software-as-a-service applications, and IoT devices; and website and application security products comprising web application firewall, bot management, distributed denial of service, API gateways, SSL/TLS encryption, script management, security center, and rate limiting products. It offers website and application performance solutions, including content delivery, load balancing, DNS, agro smart routing, video stream delivery, web optimization, cache reserve, cloudfare waiting room, and cloudfare data localization suite; SASE platform through cloudfare one that provides a cloud-based network-as-a-service; network services which deliver network connectivity, security, and performance, including magic WAN, magic transit, magic firewall, cloudflare network interconnect, and spectrum. In addition, the company provides zero trust services, such as cloudflare access, cloudflare gateway, remote browser isolation, cloud access security broker, cloud email security, and data loss prevention products that protects, inspects, and provides privilege rules to grant access to data and application. Further, it provides developer-based solutions consisting of cloudflare workers, R2 object storage, workers KV, durable objects, cloudfare pages, cloudfare stream, and cloudfare images; and consumer products comprising of 1.1.1.1, a DNS resolver, WARP, a virtual private network, and cloudfare registrar that secures registration and management of domain names. The company serves customers in the technology, healthcare, financial services, consumer and retail, industrial, and non-profit industries, as well as government. Cloudflare, Inc. was incorporated in 2009 and is headquartered in San Francisco, California.

Cloudflare Bull Case

Here are some ways that investors could benefit from investing in Cloudflare, Inc.:

  • Cloudflare, Inc. has a strong market capitalization of approximately $58.68 billion, indicating a robust position in the cloud services sector, which can attract more institutional investors.
  • The company has recently reported a quick ratio of 3.37, suggesting it has sufficient short-term assets to cover its liabilities, which is a positive indicator of financial health.
  • Insider trading activity shows confidence in the company, with significant purchases and sales by executives, indicating they are actively managing their stakes and believe in the company's future potential.
  • As of now, the stock price is around $131.66, which reflects a recent trading activity that could present a buying opportunity for investors looking to enter at a favorable price.
  • Institutional investors own 82.68% of the company's stock, which often signifies strong confidence in the company's long-term growth prospects and stability.

Cloudflare Bear Case

Investors should be bearish about investing in Cloudflare, Inc. for these reasons:

  • The company reported a negative earnings per share of ($0.03), missing the consensus estimate, which may raise concerns about its profitability and ability to generate positive returns for shareholders.
  • Cloudflare, Inc. has a negative return on equity of 5.52%, indicating that the company is not currently generating profit from its equity, which could deter potential investors.
  • Recent insider sales, including significant transactions by the CFO and CEO, may signal a lack of confidence in the stock's short-term performance, which could be a red flag for investors.
  • The company has a high price-to-earnings ratio of -777.19, suggesting that it may be overvalued relative to its earnings, which could lead to a price correction in the future.
  • With a negative net margin of 4.72%, Cloudflare, Inc. is currently operating at a loss, which could impact its ability to reinvest in growth and innovation.

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