Cloudflare’s stock, symbolized as NET, surged by as much as 22% on Friday after announcing better-than-expected earnings results on Thursday. The cybersecurity company outperformed market expectations for both earnings and sales in the fourth quarter, leading to a positive market response.
Following adjustments to inflation readings, stock indices experienced an upward trend on Friday. The S&P 500 rose by 0.57%, reaching a historic high above the 5,000 mark at 5,026, while the NASDAQ Composite gained 1.25%.
Despite closing up 19.4% on Friday, Cloudflare’s stock only dipped by 0.85% after hours, trading at $107. The company’s fourth-quarter sales increased by 32% compared to the previous year, showcasing robust performance.
Cloudflare reported adjusted earnings per share (EPS) of $0.15 for Q4, surpassing Wall Street estimates by 3 cents. Revenue also exceeded expectations, reaching $362.5 million, compared to the forecasted $353 million. The company achieved record levels of operating cash flow and free cash flow in the quarter, demonstrating its financial strength.
Mark Anderson, former CEO of Alteryx (AYX), was appointed as Cloudflare’s new president of revenue. CEO Matthew Prince expressed satisfaction with the company’s performance, highlighting strong quarterly results and significant customer wins.
Management provided optimistic sales projections for Q1 and the entirety of 2024, with expectations largely in line with market forecasts. Adjusted EPS for the full year is anticipated to be higher than previously forecasted.
Cloudflare’s stock is trading above Wall Street’s consensus price target, with Morgan Stanley attributing this to increased cybersecurity demand following a surge in cyberattacks. During the quarter, Cloudflare secured a significant security contract with the US Department of Commerce and experienced a 34% growth in total customers compared to the previous year.
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Cloudflare stock forecast
Cloudflare stock surged dramatically on Friday, outperforming its run afterhours on Thursday. However, traders decided to take profits toward the late afternoon. That is why the large gap up has produced a red candlestick on the daily chart: NET stock looks poised to close lower than its open, which is never a good sign.
The odds are that cybersecurity stock will trend down toward the 161.8% Fibonacci level at $98.85. This is near both the $100 psychological level and right where Bernstein analysts placed their price target, up from $85. Traders will expect resistance from the 261.8% Fibonacci at $111.65.
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NET daily stock chart