Cloudflare (NYSE:NET) Shares Up 6% - Still a Buy?

Key Points

• Cloudflare shares rose about 6% to roughly $309, supported by expanding Cloudflare OS integrations, a developer base exceeding 10 million, and continued AI-related growth initiatives.
• The company reported 35.9% year-over-year revenue growth and adjusted EPS of $0.29, beating estimates; analysts remain broadly bullish, with a consensus “Moderate Buy” rating and $330.59 price target.
• Valuation remains a major risk: Cloudflare is still unprofitable on a GAAP basis and trades at a very high sales multiple, while recent insider selling and heightened share-price volatility could weigh on investor sentiment.

Cloudflare, Inc. (NYSE:NET - Get Free Report)'s share price was up 6% on Wednesday. The stock traded as high as $309.11 and last traded at $309.22. 926,309 shares were traded during trading, a decline of 77% from the average daily volume of 4,035,260 shares. The stock had previously closed at $291.69.

Trending Headlines about Cloudflare

Here are the key news stories impacting Cloudflare this week:

• Positive Sentiment: Cloudflare expanded Cloudflare OS, its AI workspace platform, with integrations for enterprise software tools. The broader partner ecosystem could support adoption by large corporate customers while keeping AI data and access controls within Cloudflare’s security platform. Cloudflare Deepens Cloudflare OS Ties With Enterprise Software
• Positive Sentiment: More than 10 million developers are reportedly building on Cloudflare, reinforcing the company’s positioning in developer tools, Workers and AI-related workloads. Continued developer adoption could support future customer and revenue growth. More than 10 Million Developers Are Building on Cloudflare
• Positive Sentiment: Stifel reiterated a Buy rating, citing opportunities across Cloudflare’s various growth initiatives. TD Cowen also lifted its price target to $375, adding support for the bullish case. Stifel Reiterates Buy on Cloudflare
• Neutral Sentiment: Cloudflare’s latest reported quarter showed revenue growth of 35.9% and adjusted EPS of $0.29, above the $0.27 consensus estimate. However, the company remains unprofitable on a GAAP basis, making future growth execution particularly important.
• Negative Sentiment: Valuation remains a key risk. Analysts and commentary noted that NET trades at a very high sales multiple while still reporting losses. The stock had declined 15.2% over the week through October 19, substantially underperforming the broader market, increasing concerns about volatility and expectations.
• Negative Sentiment: CFO Thomas Seifert sold 12,500 shares for approximately $3.74 million, while director Carl Ledbetter sold 5,000 shares for about $1.52 million. Both transactions were conducted under pre-arranged Rule 10b5-1 plans, which reduces their significance as discretionary bearish signals, but the sales may still weigh modestly on sentiment. Cloudflare CFO Insider Sale

Analysts Set New Price Targets

NET has been the topic of a number of recent analyst reports. Mizuho upped their price objective on Cloudflare from $260.00 to $310.00 and gave the company an "outperform" rating in a report on Wednesday, July 15th. KeyCorp upped their price target on Cloudflare from $300.00 to $375.00 and gave the stock an "overweight" rating in a research note on Friday, August 7th. Raymond James Financial began coverage on shares of Cloudflare in a research note on Tuesday, July 7th. They issued a "strong-buy" rating for the company. Morgan Stanley reaffirmed an "overweight" rating and set a $370.00 price objective on shares of Cloudflare in a research report on Friday, August 7th. Finally, Benchmark downgraded Cloudflare to an "underperform" rating in a report on Tuesday, July 7th. One investment analyst has rated the stock with a Strong Buy rating, twenty-one have issued a Buy rating, six have assigned a Hold rating and five have issued a Sell rating to the company. According to data from MarketBeat, Cloudflare presently has a consensus rating of "Moderate Buy" and a consensus target price of $330.59.

Cloudflare Stock Up 6.9%

The stock has a market cap of $110.23 billion, a price-to-earnings ratio of -537.24, a P/E/G ratio of 236.68 and a beta of 1.65. The firm's 50 day moving average is $318.95 and its two-hundred day moving average is $265.73. The company has a current ratio of 1.82, a quick ratio of 1.82 and a debt-to-equity ratio of 1.22.

Cloudflare (NYSE:NET - Get Free Report) last posted its quarterly earnings results on Thursday, August 6th. The company reported $0.29 earnings per share for the quarter, topping analysts' consensus estimates of $0.27 by $0.02. The company had revenue of $696.06 million for the quarter, compared to the consensus estimate of $664.66 million. Cloudflare had a negative net margin of 8.21% and a negative return on equity of 3.88%. Cloudflare's revenue was up 35.9% on a year-over-year basis. During the same quarter last year, the firm posted $0.21 earnings per share. Cloudflare has set its Q3 2026 guidance at 0.340-0.340 EPS and its FY 2026 guidance at 1.250-1.260 EPS. On average, sell-side analysts predict that Cloudflare, Inc. will post 0.03 EPS for the current year.

Insider Transactions at Cloudflare

In other news, insider Michelle Zatlyn sold 33,003 shares of the stock in a transaction dated Wednesday, October 7th. The shares were sold at an average price of $348.29, for a total transaction of $11,494,614.87. Following the transaction, the insider owned 69,775 shares of the company's stock, valued at approximately $24,301,934.75. This trade represents a 32.11% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Carl Ledbetter sold 5,000 shares of the business's stock in a transaction that occurred on Monday, October 19th. The shares were sold at an average price of $304.40, for a total value of $1,522,000.00. Following the completion of the sale, the director owned 868,073 shares of the company's stock, valued at $264,241,421.20. This trade represents a 0.57% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last 90 days, insiders sold 476,339 shares of company stock valued at $143,439,267. Insiders own 10.66% of the company's stock.

Hedge Funds Weigh In On Cloudflare

Large investors have recently made changes to their positions in the business. Jennison Associates LLC lifted its holdings in shares of Cloudflare by 135.8% in the 1st quarter. Jennison Associates LLC now owns 4,394,484 shares of the company's stock worth $906,758,000 after purchasing an additional 2,530,872 shares in the last quarter. Amundi increased its holdings in Cloudflare by 2.0% during the 1st quarter. Amundi now owns 1,707,256 shares of the company's stock worth $352,275,000 after purchasing an additional 32,804 shares in the last quarter. Pictet Asset Management Holding SA boosted its position in shares of Cloudflare by 17.6% during the first quarter. Pictet Asset Management Holding SA now owns 1,381,985 shares of the company's stock valued at $284,900,000 after buying an additional 206,506 shares during the last quarter. National Pension Service raised its position in Cloudflare by 1.6% in the 2nd quarter. National Pension Service now owns 959,987 shares of the company's stock valued at $235,466,000 after buying an additional 15,546 shares during the last quarter. Finally, Swedbank AB lifted its stake in Cloudflare by 697.5% during the 1st quarter. Swedbank AB now owns 927,606 shares of the company's stock valued at $191,402,000 after acquiring an additional 811,297 shares in the last quarter. Institutional investors and hedge funds own 82.68% of the company's stock.

About Cloudflare

Cloudflare, Inc NYSE: NET provides cloud connectivity, security and performance services for websites, applications, corporate networks and other internet-connected resources. Its global network is designed to help organizations improve the reliability, speed and security of digital services while reducing the complexity of managing internet infrastructure.

The company's offerings include content delivery and authoritative domain name system services, distributed denial-of-service protection, web application and application programming interface security, bot management, and network security tools.

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