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Riding the Cloud: Why Cloudflare (NET) May Be an Attractive Investment Opportunity

A publicly traded American firm named Cloudflare Inc. (NET) specialises in offering a variety of cloud-based services that are intended to improve internet performance and security. The content delivery network (CDN), DDoS defence, internet security, and other services are among them.

2009 saw the founding of Cloudflare, which went public in September 2019. The company has been traded on the New York Stock Exchange (NYSE) under the ticker "NET" ever since its initial public offering (IPO). The market value of Cloudflare was over $50 billion as of February 2023, and the price of the stock had increased consistently throughout the previous few years.

One of the most crucial measures in recent years for Cloudflare has been revenue growth. The overall income for Cloudflare in 2021 was $932.1 million, a substantial 50% increase over the previous year. The expansion of the company's product and service offerings, as well as a rise in clients, were the main drivers of this growth. As of the end of 2021, the company had more than $2.5 billion in cash and investments, demonstrating its ability to maintain a strong balance sheet. Also, Cloudflare has made significant investments in R&D, leading to the launch of new goods and services. For instance, Cloudflare introduced a new package called Cloudflare One in 2020 that offers secure to internet applications,

resources and data for remote employees.

The customer base of Cloudflare is varied, including a wide spectrum of clients from small businesses to huge corporations across numerous industries. Almost 4.4 million clients had enrolled with Cloudflare as of 2021, including more than 25,000 paid users. Among these clients are well-known companies like Shopify, Zendesk, and Udacity. The company has grown significantly over the past five years, but it has also consistently posted net losses. The company's net loss increased from $83.9 million in 2020 to $172.4 million in 2021. It's important to note that the company's focus on expansion can be linked to these losses, and investors may see this as an investment that will pay off in the long run.

From a technical perspective, NET appears to have found base around $38 and has now broken a minor swing high. With momentum (MACD) remaining bullish and overbought conditions being relieved already, it could be time for NET to find some legs. For leveraged positions, I would suggest stop loss placements below the newfound support around $37 as if this were to break, there's nothing to stop this trading lower until a wider longer lasting bull run were to begin.

Overall, Cloudflare is a desirable investment prospect for many investors due to its development potential, wide customer base, and growing product offerings. The business is in a good position to benefit from the rising demand for cloud-based services, particularly in the areas of internet performance and security. With technical alignment, NET remains top of our watchlist.


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