Cloudflare (NYSE:NET) Stock Falls 8.5% – Here’s Why

Cloudflare, Inc. (NYSE:NET)’s share price was down 8.5% during mid-day trading on Thursday. The company traded as low as $233.62 and last traded at $243.7880. 8,035,082 shares traded hands during mid-day trading, an increase of 99% from the average session volume of 4,037,998 shares. The stock had previously closed at $266.58.

Key Cloudflare News

Here are the key news stories impacting Cloudflare this week:

• Positive Sentiment: JPMorgan upgraded Cloudflare, helping lift sentiment ahead of the earnings report. Cloudflare Stock Rating Upgraded by JPMorgan
• Positive Sentiment: Zacks Research raised its rating from “strong sell” to “hold,” a less bearish signal, though not an outright buy recommendation. Zacks Research ratings
• Positive Sentiment: Options data cited by Barchart suggests some traders see an opportunity to buy NET shares ahead of the quarterly results. Barchart analysis ahead of earnings
• Neutral Sentiment: The Nov. 5 report will test whether growth continued to accelerate after Cloudflare cut 20% of its workforce in May. The results and outlook may be key to determining whether the restructuring supports growth. Cloudflare’s earnings test after staff cuts
• Negative Sentiment: Valuation concerns remain a headwind after NET pulled back from its October high. An analysis also points to insider selling and options-market signals suggesting potential further weakness after earnings. Cloudflare valuation, insider sales and options
• Negative Sentiment: Jefferies cut its price target, adding to pressure on the shares ahead of results. Jefferies cuts Cloudflare price target

Analyst Upgrades and Downgrades

Several research analysts have issued reports on NET shares. Morgan Stanley began coverage on shares of Cloudflare in a report on Tuesday. They issued an “overweight” rating for the company. Guggenheim increased their price target on shares of Cloudflare from $140.00 to $160.00 and gave the company a “sell” rating in a report on Friday, August 7th. JPMorgan Chase & Co. upgraded shares of Cloudflare from a “neutral” rating to an “overweight” rating and set a $350.00 price target on the stock in a report on Tuesday. Barclays raised their price target on shares of Cloudflare from $355.00 to $400.00 and gave the company an “overweight” rating in a research report on Monday, October 12th. Finally, Scotiabank boosted their price objective on shares of Cloudflare from $300.00 to $390.00 and gave the stock an “outperform” rating in a report on Friday, August 7th. Twenty-four research analysts have rated the stock with a Buy rating, eight have assigned a Hold rating and five have issued a Sell rating to the company. According to data from MarketBeat, the company currently has an average rating of “Moderate Buy” and a consensus target price of $333.21.

Cloudflare Price Performance

The firm has a fifty day moving average of $319.83 and a 200 day moving average of $249.01. The company has a market capitalization of $86.17 billion, a P/E ratio of -420.32, a P/E/G ratio of 211.89 and a beta of 1.37. The company has a current ratio of 1.82, a quick ratio of 1.82 and a debt-to-equity ratio of 1.22.

Cloudflare (NYSE:NET) last issued its earnings results on Thursday, August 6th. The company reported $0.29 earnings per share for the quarter, topping analysts’ consensus estimates of $0.27 by $0.02. The business had revenue of $696.06 million during the quarter, compared to analyst estimates of $664.66 million. Cloudflare had a negative return on equity of 3.88% and a negative net margin of 8.21%. Cloudflare’s revenue was up 35.9% on a year-over-year basis. During the same quarter in the previous year, the firm earned $0.21 EPS. On average, equities research analysts anticipate that Cloudflare, Inc. will post 0.03 EPS for the current year.

Insider Transactions at Cloudflare

In other Cloudflare news, Director Carl Ledbetter sold 5,000 shares of Cloudflare stock in a transaction that occurred on Monday, October 19th. The shares were sold at an average price of $304.40, for a total value of $1,522,000.00. Following the completion of the sale, the director owned 868,073 shares of the company’s stock, valued at approximately $264,241,421.20. The trade was a 0.57% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Michelle Zatlyn sold 33,003 shares of the business’s stock in a transaction on 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 sale, the insider owned 69,775 shares of the company’s stock, valued at approximately $24,301,934.75. This represents a 32.11% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 259,057 shares of company stock worth $79,516,905 over the last three months. 10.66% of the stock is currently owned by company insiders.

Hedge Funds Weigh In On Cloudflare

Several hedge funds and other institutional investors have recently modified their holdings of NET. GK Wealth Management LLC bought a new stake in shares of Cloudflare in the 3rd quarter worth about $25,000. Cornerstone Financial Management LLC boosted its stake in shares of Cloudflare by 65.3% during the 2nd quarter. Cornerstone Financial Management LLC now owns 119 shares of the company’s stock worth $29,000 after purchasing an additional 47 shares during the period. C M Bidwell & Associates Ltd. bought a new position in Cloudflare during the 2nd quarter valued at about $30,000. CX Institutional grew its holdings in Cloudflare by 49.4% during the 2nd quarter. CX Institutional now owns 133 shares of the company’s stock valued at $33,000 after purchasing an additional 44 shares during the last quarter. Finally, Cape Investment Advisory Inc. bought a new position in Cloudflare during the 2nd quarter valued at about $33,000. 82.68% of the stock is owned by institutional investors.

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.