It has been a terrific year for web security and content delivery company Cloudflare (NYSE:NET), to say the least. Anyone who took a long position in NET stock has enjoyed powerful gains.
Sure, there was a sharp dip in the share price in late September and early October. As you may recall, I encouraged informed investors to stay the course with Cloudflare during that challenging time.
That call turned out to be timely. Soon enough, NET stock rallied to fresh highs. It just goes to show that a rock-solid name like this one can be bought on the dips with confidence.
Now, however, we have to re-appraise the stock at its new, higher price point. As always, we’ll let the data guide us in our assessment. But the bulls should definitely like the latest fiscal figures.
NET Stock at a Glance
Interestingly, NET stock got off to a slow start in 2021. For months on end, it was stuck around the $70 mark. But then a distressing event happened; the Colonial Pipeline breach exposed vulnerabilities in computer networks, highlighting the need for cybersecurity.
The silver lining of this event? It put Cloudflare in a great position as a company that solves these problems.
This may have contributed to the impressive summertime rally in NET stock. However, as the share price propelled to a high of $137 in September, the bears seemingly went into hibernation.
Next, there was a quick dip, but that only turned out to be a prime buying opportunity. By mid-November, the Cloudflare share price was above $210 with the momentum definitively to the upside.
As the old saying goes, the trend is your friend. Clearly, NET stock has been friendly to its loyal shareholders.
A Landmark Quarter for Cloudflare
If there are any skeptics left, the recently available financial data should cement the argument that Cloudflare remains the leader in edge computing. After all, how many businesses in this niche can claim to have five consecutive quarters of 50%-or-greater sales growth?
Cloudflare co-founder and CEO Matthew Prince called 2021’s third quarter a “landmark” period. And he’s fully justified in that assessment. For example, NET posted total revenues of $172.3 million, representing an increase of 51% on a year-over-year (YOY) basis.
Don’t expect Cloudflare to slow down in the fourth quarter, either. During that period, the company expects to generate a whopping $184 million to $185 million in revenues.
In other words, the skeptics should prepare for another “landmark” quarter — and perhaps higher prices in NET stock as well.
One Less Thing to Worry About
While we’re at it, we should also mention that Cloudflare has picked up some big-money clients recently, bolstering NET stock. Indeed, as the company’s CEO observed in the report, NET’s large customer growth increased by 71% YOY in Q3. Cloudflare added roughly 170 large customers during the quarter, bringing the total count to 1,260.
Why do these large clients count on the company for edge-computing and cybersecurity services? This can — to a great extent — be attributed to Cloudflare’s commitment to research and development as well as to continually advancing its technology. Prince noted the following:
“We’re laser focused on investing profits back into our business, continuing to fuel our innovation machine, and supporting even more global organizations as they plug into our network platform.”
With the “innovation machine” running smoothly, Cloudflare can efficiently and consistently monitor its clients’ networks. “We want to give them one less thing to worry about so they can focus on running their businesses,” Prince explained.
The Takeaway on NET Stock
All told, whether you prefer to buy the dips or just hold on for the long term, NET stock can be one of your most confident purchases right now.
Growth in Cloudflare’s sales and large customer count prove the point that the company is clearly in growth mode. Therefore, the doubters don’t have a leg to stand on as Cloudflare helps more of the world’s big businesses keep their networks safe and secure.
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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