Investors Buy Large Volume of Call Options on Cloudflare (NYSE:NET)

Key Points

• Investors bought an unusual volume of 18,720 call options (about 20% above typical daily call volume), and Cloudflare shares jumped about 8.6% to $181.29 on Monday.
• Cloudflare beat quarterly estimates (EPS $0.28 vs. $0.27; revenue $614.5M vs. $591.7M), with revenue up 33.6% year-over-year, but the company remains unprofitable with a negative net margin and negative ROE.
• Corporate insiders have been net sellers recently, disposing of 624,247 shares worth $121.1M in the last 90 days, while insiders still own about 10.89% of the company.

Cloudflare, Inc. (NYSE:NET - Get Free Report) was the target of some unusual options trading activity on Monday. Investors acquired 18,720 call options on the company. This represents an increase of 20% compared to the typical daily volume of 15,541 call options.

Cloudflare Stock Up 8.6%

Shares of NYSE:NET traded up $14.30 during midday trading on Monday, hitting $181.29. The stock had a trading volume of 3,078,992 shares, compared to its average volume of 4,737,367. Cloudflare has a 12 month low of $100.25 and a 12 month high of $260.00. The company has a quick ratio of 1.98, a current ratio of 1.98 and a debt-to-equity ratio of 1.35. The business's 50-day simple moving average is $194.59 and its 200-day simple moving average is $201.74. The company has a market cap of $63.81 billion, a P/E ratio of -622.94 and a beta of 1.87.

Cloudflare (NYSE:NET - Get Free Report) last released its earnings results on Tuesday, February 10th. The company reported $0.28 earnings per share for the quarter, beating the consensus estimate of $0.27 by $0.01. Cloudflare had a negative net margin of 4.72% and a negative return on equity of 7.24%. The business had revenue of $614.51 million during the quarter, compared to analysts' expectations of $591.67 million. During the same period last year, the business earned $0.19 earnings per share. The firm's revenue was up 33.6% on a year-over-year basis. On average, sell-side analysts forecast that Cloudflare will post -0.11 earnings per share for the current fiscal year.

Analyst Upgrades and Downgrades

Several analysts have commented on the stock. Jefferies Financial Group raised their target price on shares of Cloudflare from $185.00 to $225.00 and gave the stock a "hold" rating in a report on Wednesday, February 11th. Scotiabank lowered their price objective on shares of Cloudflare from $255.00 to $225.00 and set a "sector perform" rating on the stock in a report on Wednesday, February 11th. Guggenheim lifted their price objective on shares of Cloudflare from $117.00 to $140.00 and gave the company a "sell" rating in a report on Wednesday, February 11th. Weiss Ratings reiterated a "sell (d-)" rating on shares of Cloudflare in a report on Wednesday, January 21st. Finally, UBS Group reiterated a "neutral" rating and issued a $220.00 price objective on shares of Cloudflare in a report on Wednesday, February 11th. One research analyst has rated the stock with a Strong Buy rating, eighteen have assigned a Buy rating, eight have assigned a Hold rating and two have issued a Sell rating to the company's stock. According to data from MarketBeat.com, the stock currently has a consensus rating of "Moderate Buy" and an average price target of $233.38.

Insider Activity

In other Cloudflare news, Director Mark J. Hawkins sold 133 shares of the firm's stock in a transaction that occurred on Wednesday, April 1st. The shares were sold at an average price of $209.60, for a total transaction of $27,876.80. Following the sale, the director directly owned 10,322 shares in the company, valued at approximately $2,163,491.20. This trade represents a 1.27% decrease in their position. The sale was disclosed in a filing with the SEC, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CFO Thomas J. Seifert sold 10,341 shares of the firm's stock in a transaction that occurred on Tuesday, March 17th. The stock was sold at an average price of $212.30, for a total transaction of $2,195,394.30. Following the sale, the chief financial officer owned 224,625 shares in the company, valued at $47,687,887.50. This trade represents a 4.40% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. In the last ninety days, insiders sold 624,247 shares of company stock worth $121,102,467. Corporate insiders own 10.89% of the company's stock.

Hedge Funds Weigh In On Cloudflare

Hedge funds and other institutional investors have recently made changes to their positions in the company. HM Payson & Co. bought a new position in shares of Cloudflare in the fourth quarter valued at $25,000. Physician Wealth Advisors Inc. boosted its position in Cloudflare by 693.3% during the third quarter. Physician Wealth Advisors Inc. now owns 119 shares of the company's stock worth $26,000 after purchasing an additional 104 shares during the period. Wiser Advisor Group LLC bought a new position in Cloudflare during the third quarter worth $26,000. Westside Investment Management Inc. boosted its position in Cloudflare by 100.0% during the third quarter. Westside Investment Management Inc. now owns 130 shares of the company's stock worth $28,000 after purchasing an additional 65 shares during the period. Finally, ORG Wealth Partners LLC boosted its position in Cloudflare by 101.4% during the third quarter. ORG Wealth Partners LLC now owns 139 shares of the company's stock worth $30,000 after purchasing an additional 70 shares during the period. 82.68% of the stock is owned by institutional investors.

Cloudflare Company Profile

Cloudflare, Inc is a global web infrastructure and security company that provides a suite of services designed to improve the performance, reliability and security of internet properties. Its core offerings include a content delivery network (CDN), distributed denial-of-service (DDoS) protection, managed DNS, and a web application firewall (WAF). Cloudflare also provides tools for bot management, SSL/TLS, load balancing and rate limiting to help organizations maintain uptime and protect web applications from attack.

In addition to traditional edge and security services, Cloudflare has expanded into edge computing and developer platforms.

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