Don't Judge Cloudflare on Technicals Alone - Check Its Fundamentals!

It wasn't a great Friday for Cloudflare (NET) investors, who have watched their shares sink by -3.4% to a price of $43.78. Over the last 52 weeks, its shares moved -68.5% , with a high of $141.34 and a low of $37.37. During this time, the stock lagged the S&P 500 index by -48.7%. CloudFlare, Inc. operates as a cloud services provider that delivers a range of services to businesses worldwide. The large-cap Technology company has 3,181 full time employees and is based in San Francisco, CA. Cloudflare has not offered any dividends in the last year.

The Company Has Consistently strong gross margins with a Stable trend:

2018-12-31 2019-12-31 2020-12-31 2021-12-31
Revenue (MM) $193 $287 $431 $656
Revenue Growth n/a 49.0% 50.2% 52.3%
Gross Margins 77.4% 77.9% 76.56% 77.59%
Gross Margins Growth n/a 0.65% -1.72% 1.35%
Operating Margins -44.06% -37.61% -24.77% -19.45%
Operating Margins Growth n/a 14.64% 34.14% 21.48%
Earnings Per Share n/a $-0.72 $-0.4 $-0.83
EPS Growth n/a n/a 44.44% -107.5%
Free Cash Flow (MM) $-78 $-96 $-92 $-43
FCF Growth n/a -23.14% 4.27% 53.21%
Net Debt / EBITDA 0.37 1.87 -5.77 -14.53

Cloudflare Is Overvalued :

Compared to the Technology sector's average of 26.5, Cloudflare has a trailing twelve month price to earnings (P/E) ratio of -52.9 and, based on its Eps guidance of 0.15, an expected P/E ratio of 291.9. Cloudflare's price to book (P/B) ratio is 24.2 compared to its sector average of 5.57.

Cloudflare Is the Subject of Mixed Market Indicators :

24 analysts are following Cloudflare and have set target prices ranging from $42 to $114 per share. On average, they have given the company a rating of buy. At the current price of $43.78, NET is trading -34.33% away from its average analyst target price of $66.67 per share, implying an analyst consensus of strong upside potential for the stock. The company has an average amount of shares sold short since 6.9% of the company's shares are tied to short positions. Institutions own 86.5% of Cloudflare's shares, while the insider ownership rate stands at 0.87%. The biggest shareholder is Morgan Stanley with a 11.64% stake in the company worth approximately $1,451,008,817.00.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.