NET stock dynamics are justified and should continue
It’s been a great year for the web security and content delivery company Cloudflare (NYSE:REPORT), To say the least. Anyone who took a long position in NET stocks enjoyed some powerful gains.
Of course, there was a sharp drop in the share price in late September and early October. As you may recall, I have encouraged informed investors to stay the course with Cloudflare during this difficult time.
This call turned out to be opportune. Fairly quickly, NET stock hit new highs. It just shows that a solid name like this can be bought with confidence.
Now, however, we need to re-evaluate the stock to its new higher price. As always, we’ll let the data guide us in our assessment. But bulls should definitely like the latest tax figures.
NET stock at a glance
Interestingly, NET stock got off to a slow start in 2021. For months, it stuck around $ 70. But then a painful event occurred; the colonial pipeline infringe vulnerabilities exposed in computer networks, highlighting the need for cybersecurity.
The silver lining of this event? This has put Cloudflare in a great position as a company that solves these issues.
This may have contributed to the impressive summer rally in NET stocks. However, as the stock price peaked at $ 137 in September, the bears apparently went into hibernation.
Then there was a rapid decline, but it only turned out to be a prime buying opportunity. In mid-November, Cloudflare’s share price was above $ 210 with momentum definitely on the rise.
As the old saying goes, the trend is your friend. Clearly, NET stock has been friendly with its loyal shareholders.
An emblematic district for Cloudflare
While skeptics remain, the recently available financial data should support the argument that Cloudflare remains the leader in edge computing. After all, how many companies in this niche can claim to have five consecutive quarters sales growth of 50% or more?
Cloudflare co-founder and CEO Matthew Prince called the third quarter of 2021 a “landmark” period. And it is fully justified in this assessment. For example, NET posted total revenue of $ 172.3 million, which is a 51% year-over-year (YOY) increase.
Don’t expect Cloudflare to slow down in Q4, either. During this period, the company expects to generate a whopping $ 184-185 million in revenue.
In other words, skeptics should be bracing for another “benchmark” quarter – and perhaps higher prices in NET stock as well.
One less thing to worry about
While we’re at it, we also have to mention that Cloudflare recently picked up some high-income customers, boosting the NET stock as well. Indeed, as the CEO of the company observed in the report, NET’s strong customer growth grew by 71% year-on-year in the third quarter. Cloudflare added approximately 170 large customers during the quarter, bringing the total to 1,260.
Why do these large customers rely on the company for cutting edge and cybersecurity services? This can – to a large extent – be attributed to Cloudflare’s commitment to research and development as well as to the continuous improvement of its technology. Prince noted the following:
“We’re laser-focused on reinvesting profits into our business, continuing to fuel our innovation machine and supporting even more global organizations as they connect to our network platform. “
With the proper functioning of the “innovation machine”, Cloudflare can efficiently and consistently monitor its customers’ networks. “We want to give them one less thing to worry about so that they can focus on running their business,” Prince explained.
Take-out meals on the NET stock
All in all, whether you prefer to buy the dips or just hold them for the long term, NET stocks can be one of your safest buys right now.
Cloudflare’s sales growth and the large number of customers prove that the company is clearly in growth mode. Therefore, skeptics have no support, as Cloudflare is helping more of the world’s largest companies keep their networks secure.
At the time of publication, Louis Navellier had a long position on NET. Louis Navellier did not have (directly or indirectly) any other position on the securities mentioned in this article. The InvestorPlace research staff member primarily responsible for this article did not hold (directly or indirectly) any positions in any of the securities mentioned in this article.
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