Cloudflare Has a Good Story That Must Avoid Becoming a Tall Tale

InvestorPlace2022-01-03

Investors in Cloudflare (NYSE:NET) stock are finding life in the middle to be baffling. In the past 12 months, NET stock was being overlooked for reasons that I would have to guess had to do with ...

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Comments

notlhw
2022-01-03
notlhw
Buy buy buy
boonzyyy
2022-01-03
boonzyyy
Nic
Ironman2002
2022-01-03
Ironman2002
Let’s wait for a bullish confirmation to buy NET
SSSG
2022-01-03
SSSG
Noted
- US_watchlist:
  yah
tan5i
2022-01-03
tan5i
Hi

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In the past 12 months, NET stock was being overlooked for reasons that I would have to guess had to do with ...</p>\n\n<a href=\"https://investorplace.com/2021/12/net-stock-has-good-story-must-avoid-becoming-tall-tale/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"NET","symbol_name":"Cloudflare, Inc.","start_time":0,"source_url":"https://investorplace.com/2021/12/net-stock-has-good-story-must-avoid-becoming-tall-tale/","article_id":"1117187660","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1117187660","pubTimestamp":1641181127,"sourceInfo":{"source_id":"lsy1606302653667","name":"InvestorPlace"},"weMediaInfo":null,"summary":"NET stock has a bright future, but be careful not to pay tomorrow’s price today","collect":0,"end_time":0,"defaultTopTitle":"investorplace.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"NET":"Cloudflare, Inc."},"translate_title":"Cloudflare有一个很好的故事，但必须避免变成一个高大上的故事","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NET":0.9},"content_text":"Investors in Cloudflare (NYSE:NET) stock are finding life in the middle to be baffling. In the past 12 months, NET stock was being overlooked for reasons that I would have to guess had to do with investors chasing other sectors.But that all changed in early summer. As our Louis Navellier points out the Colonial Pipeline breach and subsequent ransom put the issue of cybersecurity on the front burner for investors. And almost overnight, NET stock began what has become a meteoric ascent.However, the ascent was moving along in a fairly orderly fashion. That is until Oct. 1. At that point, NET stock went hyperbolic, nearly doubling its stock price in the six weeks from Sept. 29 to Nov. 18. The new catalyst appeared to be the Meta Platforms (NASDAQ:FB) – then Facebook – outage in early October.Finally, the company’s most recent earnings report in November pushed NET stock to the top that it couldn’t hold. The stock is down almost 30% in the last month. So that is leading many to ask whether the sell-off is over.I tend to follow the adage of not paying tomorrow’s price today. 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In fact, Prince said, “As long as we can achieve extraordinary growth, we anticipate that we will pour our profits back into our research and development and sales and marketing machine.” He went on to say, “We anticipate that we will hover just below or above breakeven likely for years to come.”On the surface, that’s not a particularly controversial comment. Particularly in the context that Cloudflare was going to continue to develop innovative products to fuel its growth. Nevertheless, I can’t help but look at those words, “As long as we can achieve extraordinary growth…”And I hope investors look at them too. So far so good. In the quarter just ended, Cloudflare’s revenue was 13% higher than the prior quarter. And the company posted double-digit sequential growth in three of the last four quarters.So maybe Prince knows of what he speaks. However, if that growth slows, Prince may only have himself to blame if investors decide to bail on NET stock.NET Stock Is a Cautious BuyThe risk of buying Cloudflare at its current price is that it may have further to fall. Of course, the risk of not buying NET stock is that the stock could be near a bottom.Alex Sirois wrote that Wall Street analysts gave NET stock a consensus price target of $212.50. According to MarketBeat data on Cloudflare, the consensus price target is $164.55.That’s a premium of about 20% from the stock’s current price. That seems much more realistic when you consider that the average gain in Dow Jones stocks over the past 10 years is 11.5%.If you can buy a stock with strong conviction that it can generate a return that’s 2x the average for its exchange, you do that. If you have that conviction in Cloudflare, then the stock would seem to be at a good buying point. 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