Cloudflare (NYSE:NET) Stock Price Down 10.5% - Here's Why

Key Points

• Cloudflare shares fell 10.5% to about $277.60, well below the 50-day moving average of $320.74, amid sharply mixed analyst sentiment. While Wells Fargo and TD Cowen raised price targets, other firms downgraded the stock, resulting in a “Moderate Buy” consensus and $333.70 average target.
• The company’s latest quarter exceeded expectations, with EPS of $0.29 versus $0.27 expected and revenue of $696.06 million, up 35.9% year over year. However, Cloudflare continued to report a negative net margin and negative return on equity, while its valuation remained exceptionally high.
• Insider selling added pressure: insiders sold 476,339 shares worth approximately $143.4 million over the past three months, although the reported transactions were conducted under pre-arranged Rule 10b5-1 plans.

Cloudflare, Inc. (NYSE:NET - Get Free Report) shares traded down 10.5% on Friday. The stock traded as low as $280.44 and last traded at $277.6040. Approximately 1,595,049 shares traded hands during trading, a decline of 60% from the average daily volume of 4,014,815 shares. The stock had previously closed at $310.30.

Analysts Set New Price Targets

NET has been the topic of a number of recent research reports. Wall Street Zen downgraded Cloudflare from a "buy" rating to a "hold" rating in a research note on Sunday, October 25th. TD Cowen upped their price objective on Cloudflare from $355.00 to $375.00 and gave the stock a "buy" rating in a research report on Tuesday, October 13th. DZ Bank lowered shares of Cloudflare from a "strong-buy" rating to a "strong sell" rating in a report on Friday, August 7th. Weiss Ratings reiterated a "sell (d-)" rating on shares of Cloudflare in a research note on Thursday, October 15th. Finally, Wells Fargo & Company raised their price target on shares of Cloudflare from $380.00 to $400.00 and gave the company an "overweight" rating in a research report on Wednesday. One investment analyst has rated the stock with a Strong Buy rating, twenty-one have given a Buy rating, six have given a Hold rating and five have issued a Sell rating to the company's stock. According to MarketBeat, the stock presently has a consensus rating of "Moderate Buy" and an average price target of $333.70.

Cloudflare Trading Down 11.0%

The company's fifty day simple moving average is $320.74 and its 200-day simple moving average is $247.33. The firm has a market capitalization of $97.58 billion, a PE ratio of -476.35, a P/E/G ratio of 253.49 and a beta of 1.65. The company has a debt-to-equity ratio of 1.22, a current ratio of 1.82 and a quick ratio of 1.82.

Cloudflare (NYSE:NET - Get Free Report) last released its quarterly earnings results on Thursday, August 6th. The company reported $0.29 earnings per share for the quarter, topping the consensus estimate of $0.27 by $0.02. The firm had revenue of $696.06 million during 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%. The company's revenue for the quarter was up 35.9% on a year-over-year basis. During the same quarter in the prior year, the firm earned $0.21 EPS. Cloudflare has set its Q3 2026 guidance at 0.340-0.340 EPS and its FY 2026 guidance at 1.250-1.260 EPS. As a group, sell-side analysts expect that Cloudflare, Inc. will post 0.03 earnings per share for the current fiscal year.

Insiders Place Their Bets

In other Cloudflare news, insider Michelle Zatlyn sold 33,003 shares of Cloudflare 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 directly owned 69,775 shares of the company's stock, valued at $24,301,934.75. The trade was a 32.11% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Carl Ledbetter sold 5,000 shares of the stock in a transaction that occurred on Monday, October 19th. The shares were sold at an average price of $304.40, for a total transaction of $1,522,000.00. Following the completion of the sale, the director directly owned 868,073 shares of the company's stock, valued at approximately $264,241,421.20. This trade represents a 0.57% decrease in their position. 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. Insiders sold 476,339 shares of company stock valued at $143,439,267 in the last three months. 10.66% of the stock is currently owned by insiders.

Institutional Trading of Cloudflare

Institutional investors have recently made changes to their positions in the company. Jennison Associates LLC grew its holdings in shares of Cloudflare by 135.8% during the first quarter. Jennison Associates LLC now owns 4,394,484 shares of the company's stock worth $906,758,000 after buying an additional 2,530,872 shares during the last quarter. Swedbank AB raised 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 during the last quarter. Alyeska Investment Group L.P. acquired a new stake in Cloudflare during the 2nd quarter worth approximately $75,595,000. Janus Henderson Group PLC grew its stake in shares of Cloudflare by 583.1% in the 1st quarter. Janus Henderson Group PLC now owns 241,367 shares of the company's stock valued at $49,805,000 after purchasing an additional 206,032 shares during the last quarter. Finally, Styrax Capital LP purchased a new position in shares of Cloudflare in the 1st quarter valued at approximately $41,268,000. Hedge funds and other institutional investors 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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