Last Updated: 13 Sep 2024
Executive Summary
Cloudflare Inc. (NET) is a leading provider of cloud-based network services. The company's platform offers a range of products and services that help businesses improve their website performance, security, and reliability. Cloudflare has a strong track record of growth, and its stock price has outperformed the broader market in recent years. However, the company is currently unprofitable, and its valuation is relatively high. Investors should carefully consider these factors before investing in Cloudflare.
Company Overview
Cloudflare was founded in 2009 by Matthew Prince, Lee Holloway, and Michelle Zatlyn. The company's mission is to "help build a better Internet." Cloudflare's platform offers a range of products and services that help businesses improve their website performance, security, and reliability. The company's products include:
Content Delivery Network (CDN): Cloudflare's CDN helps businesses deliver their content faster and more reliably to users around the world.
Web Application Firewall (WAF): Cloudflare's WAF helps businesses protect their websites from malicious attacks.
Domain Name System (DNS): Cloudflare's DNS helps businesses manage their domain names and improve their website's performance.
Bot Management: Cloudflare's bot management solution helps businesses identify and block malicious bots from accessing their websites.
Cloudflare's platform is used by over 25 million websites and businesses around the world. The company's customers include some of the world's largest brands, such as Google, Amazon, and Microsoft.
Fundamental Analysis
Cloudflare is a rapidly growing company. The company's revenue increased by 52% in 2021, and it is expected to grow by another 40% in 2022. However, the company is currently unprofitable. Cloudflare's net loss was $168 million in 2021, and it is expected to lose another $100 million in 2022.
Cloudflare's valuation is relatively high. The company's stock is trading at a price-to-sales (P/S) ratio of 17.76. This is higher than the average P/S ratio for companies in the technology sector.
Technical Analysis
Cloudflare's stock price has been in a downtrend since November 2021. The stock has fallen by over 30% from its all-time high of $116. The stock is currently trading below its 50-day and 200-day moving averages. This indicates that the stock is in a bearish trend.
Short Term Outlook
Cloudflare's stock price is likely to continue to decline in the short term. The company is facing headwinds from the rising interest rate environment and the slowing economy. Cloudflare is also expected to report a loss in the second quarter of 2022. This could put further pressure on the stock price.
Long Term Outlook
Cloudflare has a strong long-term growth potential. The company's platform is used by some of the world's largest brands, and it is well-positioned to benefit from the growing demand for cloud-based services. However, Cloudflare is currently unprofitable, and it is unclear when the company will become profitable. Investors should carefully consider these factors before investing in Cloudflare.
Analyst Recommendations
The majority of analysts have a "hold" rating on Cloudflare's stock. The average price target for the stock is $92.52. This is slightly higher than the current stock price.
