Cloudflare: This High-Growth Investment Carries One Big Risk

Dec. 13, 2024 11:55 PM ETCloudflare, Inc. (NET) StockAMD, ZS
Oliver Rodzianko profile picture
Oliver Rodzianko
2.46K Followers
(8min)

Summary

  • Forecasting 25% annual revenue growth, Cloudflare is expected to reach $5.07 billion in revenue by 2029, with a 25% EBITDA margin, aligning with mature peers in cloud security.
  • An estimated $101.4 billion enterprise value by 2029 implies a 21.1% CAGR, but rich multiples, volatility, and execution risks necessitate caution, especially for conservative investors.
  • With a robust market position and capable management, Cloudflare is a Moderate Buy, better suited for a growth-focused portfolio due to valuation-driven volatility risks.

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Cloudflare (NYSE:NET) is a well-managed, modern, well-positioned, and dominant cloud and network security company. I'm bullish not only on the business but the sector in general. While my valuation analysis shows a substantial margin of safety and a 20%+ five-year

This article was written by

Oliver Rodzianko profile picture
2.46K Followers
Oliver Rodzianko is an investment analyst specializing in the technology sector, grounded in timeless value principles. His expertise spans AI, semiconductors, software, and renewable energy, with a focus on companies that demonstrate resilient management and lasting competitive advantages. A trusted voice in financial analysis, Rodzianko’s insights are frequently highlighted as 'Must Reads' on Seeking Alpha, syndicated to Forbes via GuruFocus, and published on TipRanks. He seeks value-driven growth investments offering reliable and ethical returns, combining traditional fundamental analysis with modern proprietary tools.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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