NET stock appears overvalued amid rapid threat
Cloudflare (NYSE:REPORT) seems to offer strong content delivery networks and IT security products that should enable the company to grow significantly in the future. But given the skyrocketing valuation of NET shares and the strong threat of Quickly (NYSE:FSLY), I recommend investors to sell Cloudflare at this time.
Cloudflare’s bread and butter seems to be IT security. Fastly recently acquired a strong IT security company. In addition, for medium and large companies, Fastly’s products seem to have more impressive and innovative features.
Cloudflare has great products and great potential
There are plenty of indications that Cloudflare’s systems are great, while the business looks set to continue to grow significantly.
For example, on July 28, a research firm Jefferies NET stock improved to “buy” from “keep”. According to the company, the company is “disrupting” the security of legacy networks and cloud with a “unique” cloud architecture and freemium model. In addition, Jefferies expects the company to generate “hypergrowth for several years.” The company has placed a price target of $ 50 on NET stock.
During this time, Investor place Columnist David Moadel is optimistic about the company’s new “network-as-a-service” solution. This, he explained, is “designed to ensure the safety of the workforce.”
The NET headline was also bullish In search of the alpha journalist who wrote in august this:
“Cloudflare provides comprehensive performance and security coverage for the entire web application. Existing solutions are piecemeal and may require tedious changes to application code and infrastructure configuration for implementation.
In addition, in the second quarter, Cloudflare recorded impressive achievements. These included 48% year-over-year revenue growth and 7,000 new revenue-generating customers.
CEO Matthieu Prince reported in August that the company begins to make inroads with large companies.
seems to be quickly catching up on the security front
I think the main competitive advantages of the company are its computer security systems, its simplicity and its affordability compared to conventional products.
But, as I noted, Fastly recently acquired an IT security company with excellent credentials. Specifically, in my column on October 6, I wrote that Fastly had finalized its takeover of computer security company Signal Sciences.
Importantly, my column also pointed out that “before launching Signal Sciences, the founders of the company developed computer security products for a large e-commerce site, Etsy (NASDAQ:ETSY). “Also,” Report provides security for over 40,000 web applications. ”In summary, Signal looks like a heavyweight that will dramatically improve Fastly’s IT security offerings.
Meanwhile, Fastly is taking further steps to improve its IT security capabilities. Specifically, in August, CEO Joshua Bixby noted that the company invests in security while developing new security capabilities.
Fastly’s products appear to be of exceptional value
IT seems to find Fastly’s offerings exceptionally valuable because they excel in data analysis, “better monitor application performance”, allow content to be published exceptionally quickly, and have a “powerful API”.
Employees of Spotify (NYSE:PLACE), which uses Fastly, said the company’s system allows for quick but “smart” use and individualized targeting.
Based on my review of reviews of Cloudfare’s offerings, I think their customers primarily like them for their ease of use, speed, affordability, and solid protection against security threats.
For example, last November, Cloudflare review to Gartner website, the CEO of Web Mechanics SE wrote, “CloudFlare mirrors the website so human (and bot) traffic is on the mirror, not the server, providing faster page speeds and better uptime. We also receive alerts from CloudFlare for any issues that need to be checked. Another user, a technology manager at Happy coach, praised Cloudflare for its ease of use, powerful security tools, affordability, and speed.
However, I haven’t seen any indication that Cloudflare’s products have the revolutionary capabilities that Fastly offers.
The result on the NET stock
Cloudflare’s offerings appear to be great for small businesses, and the business is likely to grow rapidly in the future.
But NET stock is trading at an astounding 42 times analysts’ average sales estimate for 2020 and has a strong market cap of $ 17 billion. Meanwhile, Fastly dramatically improves its security capabilities and looks more appealing to large companies. Cloudflare is a sale at this point.
As of the publication date, Larry Ramer held a long position in Fastly.
Larry Ramer has researched and written articles on US equities for 13 years. He was employed by The Fly and Israel’s largest business newspaper, Globes. Larry started writing articles for InvestorPlace in 2015. Some of his highly successful contrarian picks include Roku, Solar Stocks, and Snap. You can reach him on StockTwits at @larryramer.