NET stock is down, strong performance points to buying opportunity
Cloudflare (NYSE:REPORT) has been on a roll during the pandemic and beyond. The California-based company is a content delivery network (CDN) provider. It operates a global network of data centers that optimizes the performance of the websites we all rely on. Cloudflare optimizes these websites and web services, making them faster, more responsive and more secure. The pandemic has given a boost to Cloudflare’s business, and NET stock has responded with an impressive performance over the past two years.
However, after closing at an all-time high of $ 217.25 on November 18, NET stock has slumped. Now trading below $ 160, stocks are down about 30% from that record close. As life begins to show signs of normalcy from days of pandemic containment, is this a correction and perhaps the end of NET stock growth? Or, do Cloudflare stocks feel the general unease that hit the stock markets and hit many tech stocks?
Another solid quarter to kick off November
Let’s go back to the beginning of November. NET stock had experienced a strong increase until October. Then, on November 4, the company released its third quarter results. Beating Wall Street estimates for revenue and profit, Cloudflare has also shown that it continues to rack up new customer registrations. Even as workers returned to the office and stores reopened, Cloudflare signed an additional 170 large customers during the quarter.
In other words, the pandemic and the resulting rush to improve internet services was an undeniable gift to Cloudflare, but the company’s growth is unrelated to the pandemic.
And if that’s not enough to justify the NET stock, remember that Cloudflare also has a business protecting connected devices against Denial of Service (DDoS) attacks, which is another high growth area. That’s why this company was on my Internet of Things (IoT) stock list.
It is a company operating in high growth sectors
The move online was happening before the pandemic, but the arrival of Covid-19 and the lockdowns that followed dramatically accelerated the trend. Online shopping, online gaming, remote working, distance learning, video streaming – they have all received a boost. Everyone benefits from a CDN, which is why Cloudflare was recruiting customers at an all-time high. And each of these trends remains strong, even now that we are returning to a sense of normalcy. For many internet-based activities, there will be no reversion to pre-pandemic levels. The lag is permanent.
This has been confirmed by the activities of Cloudflare. As its third quarter showed, the company continues to sign new customers. The ongoing move online means that Cloudflare’s revenue has plenty of room for growth. And NET stock also has a lot of room for growth.
Net result on NET stock
Despite its recent collapse, I still strongly believe in the long-term growth potential of NET stock. Cloudflare continues to deliver results that show big wins on the revenue and customer acquisition fronts. The business may not be making a profit for investors at this point, but a large part of that is because they are putting money back into their business. The reward will come. Meanwhile, with a 114% return so far in 2021 – even after a two-week drop – the NET stock proves it is a growth machine.
This Portfolio filing cabinet “B” rated stocks are not risk free, especially in the short term, as we have seen with the 30% drop in NET since mid-November.
However, just look at the performance of the stocks until their record close on November 19. They have two-year growth well over 1000%, 355% growth in 2020, and 2021 gains over 190%.
Cloudflare operates in an area that will experience only continued demand for its services. Businesses continue to strengthen their presence on the web. This means a bright future for Cloudflare. I think investors who have NET stocks in their portfolios will be rewarded.
The current drop in NET may scare some investors. A loss of 30% over two weeks will suffice. However, for those who have been following Cloudflare’s history since the company first went public in 2019, the current drop seems more like an opportunity than a warning.
As of the publication date, Louis Navellier had a long position on NET. Louis Navellier had (directly or indirectly) no 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.
Louis Navellier, who has been called “one of the most important fund managers of our time”, broke the silence by this shocking ‘say it all’ video… Exposing one of the most shocking events in our country’s history… and the one movement every american must do today.