Cloudflare (NYSE:NET) Stock Price Down 8.5% – Here’s Why

Cloudflare, Inc. (NYSE:NET) dropped 8.5% on Thursday. The stock traded as low as $233.62 and last traded at $243.7880. 8,035,082 shares changed hands during mid-day trading, an increase of 99% from the average daily volume of 4,037,998 shares. The stock had previously closed at $266.58.

Trending Headlines about Cloudflare

Here are the key news stories impacting Cloudflare this week:

• Positive Sentiment: JPMorgan upgraded Cloudflare, helping lift sentiment ahead of the earnings report. Cloudflare Stock Rating Upgraded by JPMorgan
• Positive Sentiment: Zacks Research raised its rating from “strong sell” to “hold,” a less bearish signal, though not an outright buy recommendation. Zacks Research ratings
• Positive Sentiment: Options data cited by Barchart suggests some traders see an opportunity to buy NET shares ahead of the quarterly results. Barchart analysis ahead of earnings
• Neutral Sentiment: The Nov. 5 report will test whether growth continued to accelerate after Cloudflare cut 20% of its workforce in May. The results and outlook may be key to determining whether the restructuring supports growth. Cloudflare’s earnings test after staff cuts
• Negative Sentiment: Valuation concerns remain a headwind after NET pulled back from its October high. An analysis also points to insider selling and options-market signals suggesting potential further weakness after earnings. Cloudflare valuation, insider sales and options
• Negative Sentiment: Jefferies cut its price target, adding to pressure on the shares ahead of results. Jefferies cuts Cloudflare price target

Wall Street Analyst Weigh In

A number of brokerages recently issued reports on NET. Robert W. Baird set a $330.00 price target on Cloudflare in a research note on Friday, August 7th. Needham & Company LLC increased their target price on Cloudflare from $280.00 to $380.00 and gave the stock a “buy” rating in a research note on Friday, August 7th. Raymond James Financial downgraded Cloudflare from a “strong-buy” rating to an “underperform” rating in a research report on Tuesday. Citigroup reiterated a “market outperform” rating on shares of Cloudflare in a research report on Monday, August 31st. Finally, Fox Advisors lowered shares of Cloudflare to a “neutral” rating in a research note on Tuesday. Twenty-four analysts have rated the stock with a Buy rating, eight have issued a Hold rating and five have issued a Sell rating to the stock. According to data from MarketBeat, Cloudflare has a consensus rating of “Moderate Buy” and a consensus price target of $333.21.

Cloudflare Trading Down 8.5%

The stock’s 50-day moving average price is $319.83 and its 200 day moving average price is $249.01. The company has a debt-to-equity ratio of 1.22, a current ratio of 1.82 and a quick ratio of 1.82. The firm has a market capitalization of $86.17 billion, a PE ratio of -420.32, a price-to-earnings-growth ratio of 211.89 and a beta of 1.37.

Cloudflare (NYSE:NET) last announced its quarterly earnings data on Thursday, August 6th. The company reported $0.29 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.27 by $0.02. The company had revenue of $696.06 million for the quarter, compared to analysts’ expectations of $664.66 million. Cloudflare had a negative return on equity of 3.88% and a negative net margin of 8.21%. Cloudflare’s revenue was up 35.9% compared to the same quarter last year. During the same quarter in the prior year, the firm earned $0.21 earnings per share. On average, sell-side analysts expect that Cloudflare, Inc. will post 0.03 EPS for the current fiscal year.

Insider Buying and Selling at Cloudflare

In other news, insider Michelle Zatlyn sold 33,003 shares of the stock in a transaction on Wednesday, October 7th. The stock was sold at an average price of $348.29, for a total transaction of $11,494,614.87. Following the transaction, the insider owned 69,775 shares of the company’s stock, valued at approximately $24,301,934.75. This represents a 32.11% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CFO Thomas J. Seifert sold 12,500 shares of the firm’s stock in a transaction on Monday, October 19th. The shares were sold at an average price of $299.59, for a total value of $3,744,875.00. Following the transaction, the chief financial officer owned 104,958 shares in the company, valued at approximately $31,444,367.22. This represents a 10.64% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold a total of 259,057 shares of company stock valued at $79,516,905 in the last ninety days. Corporate insiders own 10.66% of the company’s stock.

Institutional Trading of Cloudflare

Several institutional investors and hedge funds have recently made changes to their positions in NET. GK Wealth Management LLC purchased a new position in Cloudflare during the 3rd quarter valued at about $25,000. Toth Financial Advisory Corp purchased a new stake in shares of Cloudflare in the 3rd quarter worth approximately $36,000. Cornerstone Financial Management LLC lifted its position in shares of Cloudflare by 65.3% in the 2nd quarter. Cornerstone Financial Management LLC now owns 119 shares of the company’s stock worth $29,000 after purchasing an additional 47 shares during the period. C M Bidwell & Associates Ltd. bought a new position in shares of Cloudflare during the second quarter valued at approximately $30,000. Finally, CX Institutional boosted its stake in shares of Cloudflare by 49.4% during the second quarter. CX Institutional now owns 133 shares of the company’s stock valued at $33,000 after purchasing an additional 44 shares in the last quarter. 82.68% of the stock is currently owned by institutional investors.

Cloudflare Company Profile

Cloudflare, Inc (NYSE: NET) provides cloud connectivity, security and performance services for websites, applications, corporate networks and other internet-connected resources. Its global network is designed to help organizations improve the reliability, speed and security of digital services while reducing the complexity of managing internet infrastructure.

The company’s offerings include content delivery and authoritative domain name system services, distributed denial-of-service protection, web application and application programming interface security, bot management, and network security tools.