2024-04-19 11:52:13 ET
Summary
- Cloudflare had a strong fourth quarter with pipeline growth rates, sales productivity, and average deal size all increasing.
- Higher interest rates and elevated geopolitical risk are likely to weigh on customer spending going forward though, undermining expectations of a growth re-acceleration.
- Cloudflare's valuation is high, particularly in the current interest rate environment, leaving little room for error.
- While first quarter results should be strong, there is an elevated risk of weak guidance.
I believe Cloudflare's ( NET ) share price has front run the company's fundamentals in recent months after a solid fourth quarter and positive management commentary. While I don't expect the company's growth to deteriorate meaningfully, absent a recession, I think near-term expectations have become too optimistic....
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Cloudflare: Too Much Optimism