2024-06-02 10:00:00 ET
Summary
- Cloudflare stock plunged deeply into a bear market, stunning its most ardent supporters and investors.
- I assess NET's selloff was justified but likely overstated.
- Cloudflare's AI inferencing opportunity remains a long-term growth driver, likely not captured in its current estimates.
- My previous caution on Cloudflare stock is vindicated, highlighting the need to stay sane on high-growth opportunities.
- I argue why NET's valuation has improved substantially, providing investors with a solid opportunity to consider buying.
Cloudflare Stock Fell Deep Into A Bear Market
Cloudflare, Inc. (NET) investors have suffered a massive valuation de-rating, as NET stock fell almost 45% from its February 2024 highs through its lows this week. Therefore, calling it a mere bear market decline is likely an understatement, given the extent of NET's plunge. While NET has historically been a volatile stock (as seen in its price action), the recent battering likely took Cloudflare investors by surprise. I urged investors to be cautious about NET stock in my previous update in October 2023. Even though Cloudflare stock surged to a high in early February 2024, the subsequent bursting of its bubble has vindicated my circumspection. Accordingly, NET has underperformed the S&P 500 ( SPX ) ( SPY ) since my Hold rating in October last year....
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For further details see:
Cloudflare: Why The Selloff Was Necessary But Overblown (Rating Upgrade)