Cloudflare Is Doing Better Than Ever Because Its Fundamentals Are Great

Cloudflare (NYSE:NET) is an ideal company for tech investors who like to capture share-price momentum. Indeed, NET stock tends to reward long-term shareholders handsomely and without undue risk.

Close up of Cloudflare logo at the Company's headquarters

Source: Sundry Photography / Shutterstock.com

Somehow, despite its clear value proposition to the loyal investors, Cloudflare isn’t as well-known as it ought to be. Perhaps it’s just not a “meme-worthy” company on social media.

That’s perfectly fine, as hidden gems can produce the best returns in many instances. Today you can learn about NET stock and tuck it away in your portfolio if you believe in the company.

And when we drill down to Cloudflare’s fiscal data, the bull thesis should become much more evident.

NET Stock at a Glance

If you’re in the market for a real power play, then check out NET stock.

This is a “momo” (momentum) stock if there ever was one. Judging by the price action, it doesn’t need the support of the meme-stock crowd at all.

Believe it or not, NET stock could be purchased for just $17 at the beginning of 2020. You won’t likely be able to own the shares anywhere near that price today.

During the onset of the Covid-19 pandemic, businesses needed a cloud-based Internet platform. This undoubtedly helped Cloudflare, and the company’s shares moved much higher in 2020.

How much higher? By early 2021, NET stock was worth $75. On June 28, NET stock opened at $105.78.

As you can see, the short sellers have been severely punished. But we have to ask: can the bulls maintain their awesome momentum?

No one knows for sure, but Cloudflare’s stats offer lots of motivation to stay on the long side of the trade.

NET Stock Has Metrics for Miles

The Cloudflare bulls should have no difficulty arming themselves with key metrics.

We’re talking about 4.1 million total customers, and 50% revenue compound annual growth rate (CAGR) from fiscal years 2016 through 2020.

Furthermore, as of March 31, 2021, roughly 17% of Fortune 1,000 companies were paying Cloudflare customers.

Need more? No problem! Let’s perform a quick checkup on how Cloudflare fared during the first quarter of 2021:

  • $138.1 million in revenues, representing a whopping 51% year-over-year improvement
  • Record dollar-based net retention of 123%, marking a year-over-year increase of 600 basis points
  • Surpassed 4 million total customers
  • Addition of around 120 large customers — another quarterly record for the company
  • Large customers now represents over 50% of Cloudflare’s revenue

On top of all that, the company’s cash, cash equivalents and available-for-sale securities as of March 31, 2021 totaled just over $1 billion, thus indicating a solid capital position for Cloudflare.

Firing on All Cylinders

In light of a blockbuster quarterly performance, co-founder and CEO Matthew Prince had every right to indulge in some bragging.

“Firing on all cylinders, we’ve already announced or delivered more than 100 products and capabilities this year. There’s no slowing down as we continue to deliver business-critical offerings and displace point solutions with Cloudflare’s robust global network,” Prince declared.

That global network appears to be expanding. Not long ago, Cloudflare revealed that Toronto will be home to the company’s first office in Canada.

To support Cloudflare’s foray into the region, the company’s new Canada-based team and operations will “grow brand awareness, support and acquire customers, and recruit local talent.”

Toronto Mayor John Tory evidently welcomed Cloudflare with open arms. He emphasized Toronto’s “unmatched talent pipeline” along with its “highly-skilled and diverse workforce.”

Without a doubt, Cloudflare has come a long way since the company first established a data center in Canada in 2012.

Cloudflare’s network currently spans seven cities in Canada — it’s yet another opportunity for the company to provide the world with a better, more secure Internet.

The Takeaway

In the final analysis, this is one you might regret missing out on, as NET stock could be a hidden treasure in your tech-centered portfolio.

It’s not a meme stock, but it’s got powerful momentum — and Cloudflare’s stats make the company a prime holding for today’s informed investors.

On the date of publication, Louis Navellier had a long position in NET.  Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

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Article printed from InvestorPlace Media, https://investorplace.com/2021/06/net-stock-is-doing-better-than-ever-because-its-fundamentals-are-great/.

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