Cloudflare Walks a Tight Line With Its Decision to Remain in Russia

NET stock - Cloudflare Walks a Tight Line With Its Decision to Remain in Russia

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Cloudflare (NYSE:NET) has made it clear it will not pull its services out of Russia. Its servers are still operating there. So far, there has been no effect on NET stock. In fact, since Russia invaded Ukraine on Feb. 24, the stock is up 13.5% from $108.38 to $123.50 as of April 1.

Although Cloudflare has no employees in Russia, its data centers in Ukraine, Russia and Belarus operate on keyless SSL technology. If the servers lose connectivity to the internet, no one can access them. All the data is encrypted with keys that are not onsite. This is according to a recent Cloudflare blog post as well as a recent exchange with Barron’s magazine.

More importantly, Cloudflare says its continued service in Russia and Ukraine allows people there to gain access to the internet. It says the Russian government would “celebrate” if the company left the country completely. Barron’s notes that analyst Andrew Nowinski of Wells Fargo said Cloudflare is different from other companies in similar situations because it provides open internet access.

So far, this leaves Cloudflare as one of the good guys in the tech world. However, Yale professor Jeffrey Sonnenfeld is ranking companies by how much they are cutting ties with Russia. At the top are those who have “made a ‘clean break'” and at the bottom are those still “digging in.” So far, Cloudflare is stuck in Category Five — in other words, the companies that are digging in.

Investors clearly don’t care what Cloudflare does in Russia and Belarus, as long there is no effect on the stock. So far, providing access to the internet is seen as a good thing and NET stock has moved up. But if the situation changes, or if there is pressure for it to leave, Cloudflare may have to change its tune.

On the date of publication, Mark Hake did not hold (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.

Mark Hake writes about personal finance on mrhake.medium.com, Newsbreak.com and Beehiiv.com.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/net-stock-walks-a-tight-line-with-its-decision-to-remain-in-russia/.

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