Cloudflare’s stock price is at an important resistance level as the market assesses whether it has more upside after soaring 41% in 2024. It was trading at $112.55, a few points below the key resistance level of $116.
Cloudflare’s business is growing
Cloudflare is one of the most important companies in the world, yet most people have never heard of it.
It is a technology company that powers most websites that billions of people use daily. Its primary solution is a Content Delivery Network (CDN), which helps users access websites and applications faster. Its CDN solutions also help to protect websites from malicious actors.
Cloudflare has introduced other solutions over time, such as network prioritization, image resizing, and China network access.
The company provides its solutions to some of the world’s biggest companies, including Reuters, Colgate-Palmolive, IBM, Broadcom, Dropbox, and Shopify.
Therefore, if it had an outage, there are chances that the world would stop moving. A good example of this is when Fastly, a similar, but smaller company, had an outage in 2022. At the time, using popular services like the New York Times and Lyft was almost impossible.
Cloudflare’s business has continued doing well in the past few years as demand for its solutions rose. Its annual revenue moved from $287 million in 2019 to over $1.57 billion in the trailing twelve months (TTM).
Analysts are optimistic about NET
The most recent financial results showed that its quarterly revenue rose to $430 million in the third quarter, up from $336 million in the same period last year.
This growth happened as the number of paying customers jumped to 221,000. Large companies that pay it over $100,000 annually rose from 1,908 to 3,265, a notable thing since most of its revenue comes from these companies.
Cloudflare has more room to grow since it provides its solutions to about 35% of all Fortune 500 companies. This means that it has about 65% of companies that are potential future customers.
Most importantly, Cloudflare’s business opportunity has expanded, with the total addressable market rising from $176 billion in 2024 to over $222 billion by 2027. Some of the areas it expects to see more growth are in the artificial intelligence, database, internet of things, and network services.
Analysts are optimistic that Cloudflare’s business will continue growing in the coming years. The average estimate by 33 analysts is that its revenue will grow by 28% this year to over $1.66 billion. They expect its revenue to grow to $2.1 billion in 2025, up 26% from 2024.
Cloudflare is also fairly valued based on the rule of 40. Its estimated YoY revenue growth is 28%, while its operating margin is 13%, giving it a metric of 41. It also has a strong balance sheet, with over $1.8 billion in cash.
Cloudflare stock price forecast
The weekly chart shows that the NET share price has rallied in the past few months and is at an important resistance level at $116. That is a key price since it was the highest swing in February last year. It is also the upper side of the cup and handle pattern, a popular continuation sign.
Cloudflare stock also sits near the 50% Fibonacci Retracement point at $118. It has moved above the ascending trendline that connects the lowest swings since May 2023. Therefore, the stock will likely have a strong bullish breakout, possibly reaching the resistance at $143.
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