Cloudflare's lack of profitability and high valuation raise overvaluation concerns

Industry
โดย The Motley Fool·Read original
Summary · why it matters

Cloudflare's stock may be overvalued given its continued lack of profitability and a price-to-sales ratio exceeding 33 times. The company reported a net operating loss of $62 million in the first quarter, representing 9.7% of revenue, while full-year revenue guidance of $2.81 billion implies a growth deceleration to 29.6% from 34% in Q1. Competitors CrowdStrike and Fortinet are both profitable and have seen stronger stock rallies this year. Cloudflare retains over 4,400 large customers and serves more than 40% of Fortune 500 companies, but the high valuation leaves little room for error if revenue growth slows further.

Impact on stocks 3

Cybersecurity & Digital Trust▲ · 2 stocks
Crowdstrike Holdings Inc
CRWD
▲ PositiveCompetitionrelevance

Article notes CrowdStrike is profitable and has seen stronger stock rally, contrasting with Cloudflare's losses.

Fortinet Inc
FTNT
▲ PositiveCompetitionrelevance

Article notes Fortinet is profitable and has seen stronger stock rally, contrasting with Cloudflare's losses.

Cloud & Digital Infrastructure▼ · 1 stocks
Cloudflare Inc
NET
▼ NegativeCapitalrelevance

Article highlights lack of profitability, net operating loss, high valuation, and growth deceleration.

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