Although this has been a lackluster day for Cloudflare (NYSE:NET), the company has had an impressive week so far. That is because yesterday, the infrastructure and security firm announced a partnership with Microsoft (NASDAQ:MSFT) and Yandex (NASDAQ:YNDX). This deal focuses on delivering customers faster search results. And, yesterday, we saw NET stock rally — and start generating chatter online.
As always, Reddit investors have a lot to say.
What’s Happening With NET Stock
Cloudflare is no stranger to market volatility. After gaining more than 15% over the past five days, NET shares are cooling off on Tuesday, down just about 1% as of this writing.
This trend shouldn’t be discouraging. Shares are still up for more than 35% for the past month.
It’s common for digital investment communities to see this type of pullback as a key buying opportunity before the stock rises again. One might have expected to see that today regarding NET stock, but the sentiment on r/WallStreetBets and similar subreddits is far from positive. Let’s take a look at what Redditors are saying.
What’s the Word on the Street?
Mentions of NET stock spiked on Reddit early this morning although volume has declined slightly, down 3.22% from when markets opened.
“[S]o this is where the run ends,” remarked on user, noting that their comment was prompted by them seeing that the stock was trending on r/WSB.
The sentiment calling for the end of NET stock’s bull run has been echoed by other users since early this morning. Many have made it clear they are rooting against it, while others have criticized its overvalued status. As one user who had previously been bullish on the stock noted:
“NET is not just overvalued. [I]t is top 5 most expensive stock in the entire stock market. based on sales to market cap. I’m a big NET bull but i never thought it would be trading near $60B market cap today. I am ready to trim my position at this level. in fact [I] sold 2 covered calls at $200 strike. Where [I] agree is that sometimes you have to bite the bullet and take educated bets based on your conviction. last year, there were still some [people] saying NET was over valued when it was at $30-40 per share.”
As can be expected in a scenario such as this, other users began calling for a short play. As one urges “NET showing weakness on a green day. Time to short this overbought garbage trading at 100x sales.” The comment hasn’t received too many responses yet, but it’s easy to see where the short mentality comes from. Cloudflare is clearly a company that digital investors like to root against.
What’s Next for NET Stock
Volatility has been the name of the game for NET stock since markets opened this morning and as such, it’s hard to know for sure where it’s headed.
While it’s down right now, InvestorPlace analyst Louis Navellier noted yesterday that he saw growth in the company’s future, stating its recent earnings reports “paint a picture of sustained growth. Combined with client retention, the NET stock growth potential also looks positive. The company is expected to report Q3 earnings in November and that should give a better picture of whether its business is slowing up or continuing to set a blistering pace.”
As it stands, Reddit users are likely wrong to assume that this marks the end of NET stock’s bull run. The news of the day also points toward a better future for the company, and likewise, for shareholders. As November nears, Cloudflare is worth watching.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
