Does Cloudflare Inc. (NET) offer a good opportunity for investors?

Cloudflare Inc. (NYSE: NET) stock fell -1.66% on Monday to $61.72 against a previous-day closing price of $62.76. With 3.32 million shares changed hands, the volume of the stock remained lighter than its average volume of 3.56 million shares. During the session, the Software – Infrastructure company that operates in wider Technology sector, reached to the highest price of $62.73 whereas the lowest price it dropped to was $61.01. The 52-week range on NET shows that it touched its highest point at $76.07 and its lowest point at $37.37 during that stretch. It currently has a 1-year price target of $70.13. Beta for the stock currently stands at 0.95.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of NET was down-trending over the past week, with a drop of -5.71%, but this was up by 5.85% over a month. Three-month performance dropped to -8.74% while six-month performance rose 13.19%. The stock gained 1.26% in the past year, while it has gained 36.52% so far this year. A look at the trailing 12-month EPS for NET yields -0.67 with Next year EPS estimates of 0.45. For the next quarter, that number is 0.10. This implies an EPS growth rate of 28.90% for this year and 20.49% for next year.

Float and Shares Shorts:

At present, 332.30 million NET shares are outstanding with a float of 289.71 million shares on hand for trading. On Aug 30, 2023, short shares totaled 19.85 million, which was 5.94% higher than short shares on Jul 30, 2023. In addition to Mr. Matthew Prince as the firm’s Co-Founder, Chairman & CEO, Ms. Michelle Zatlyn serves as its Co-Founder, COO, Pres & Director.

Institutional Ownership:

Through their ownership of 89.21% of NET’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 52.72% of NET, in contrast to 32.97% held by mutual funds. Shares owned by individuals account for 11.06%. As the largest shareholder in NET with 10.77% of the stake, Baillie Gifford & Co. holds 31,505,621 shares worth 31,505,621. A second-largest stockholder of NET, Morgan Stanley Investment Managem, holds 30,206,910 shares, controlling over 10.32% of the firm’s shares. Capital Research & Management Co is the third largest shareholder in NET, holding 26,433,363 shares or 9.04% stake. With a 6.24% stake in NET, the American Funds Growth Fund of Ame is the largest stakeholder. A total of 18,247,635 shares are owned by the mutual fund manager. The Vanguard Total Stock Market ETF, which owns about 2.93% of NET stock, is the second-largest Mutual Fund holder. It holds 8,574,374 shares valued at 557.59 million. Vanguard Mid Cap Index Fund holds 2.18% of the stake in NET, owning 6,373,593 shares worth 414.47 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Jun 29, 2023, NET reported revenue of $234.52M and operating income of -$64.54M. The EBITDA in the recently reported quarter was -$37.33M and diluted EPS was -$0.20.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for NET since 0 analysts follow the stock currently. In the same way, a target price assigned to a stock can also reveal much about its potential. With NET analysts setting a high price target of $90.00 and a low target of $43.00, the average target price over the next 12 months is $69.22. Based on these targets, NET could surge 45.82% to reach the target high and fall by -30.33% to reach the target low. Reaching the average price target will result in a growth of 12.15% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy.

Summary of Insider Activity:

Insiders traded NET stock several times over the past three months with 0 Buys and 14 Sells. In these transactions, 0 shares were bought while 159,774 shares were sold. The number of buy transactions has increased to 12 while that of sell transactions has risen to 32 over the past year. The total number of shares bought during that period was 1,000,943 while 284,491 shares were sold.

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