Cloudflare’s Stock on the Rise: Strong Unique Selling Points

Last Updated: 11. Dezember 2023By

Today I am introducing you to an interesting tech stock that you may not have heard of yet. US internet giant Cloudflare (WKN: A2PQMN, ISIN: US18915M1071) based in San Francisco has created a platform for cloud-based network services called the „Connectivity Cloud“. Through this, the company founded in 2010 offers its customers, for example, a so-called Content Delivery Network as well as cybersecurity and DNS services (Domain Name System). A development environment for cloud applications is also part of the Connectivity Cloud’s product range. It also ensures that websites load faster and become more secure.

Intelligent platform as an interface between user and website Normally, users of a website or app access the website operator’s web server. This is not the case with Cloudflare, as visitors to the online offering land on the intermediate intelligent Cloudflare platform. This in turn accesses the relevant content on the server of the operator in a flash and displays it to the users. Only Cloudflare has direct access to data and servers, so that unwanted server accesses and cyber-attacks fail and are blocked. Apart from the shorter loading times, users do not notice anything.

20% of internet traffic is handled via Cloudflare This model is increasingly becoming the norm, as 20% of global online and app accesses now run via the Cloudflare platform – with an increasing trend. The company operates data centers in more than 310 cities worldwide. According to Cloudflare, the loading time for 95% of the world’s internet connections is no more than 50 milliseconds. Its more than 182,000 customers include 30% of the so-called Fortune 1,000 companies, i.e. the 1,000 largest US companies in terms of sales.

Profit growth exceeds analyst expectations In the last three years, revenues have increased on average by +47%. The company has only recently become profitable. In the 3rd quarter of 2023, sales increased by +32% to 336 million USD. Earnings per share rose by +167% to 0.16 USD. The analysts‘ estimates of 0.10 USD earnings per share were clearly exceeded.

For 2023, analysts expect a sales increase of +32% to 1.29 billion USD, as well as a profit increase of +246% to 0.45 USD per share. For 2024, 1.65 billion USD in sales (+28%) and approx. 0.54 USD (+20%) in earnings per share are expected.

Stock up since the beginning of 2023 Yearly chart of Cloudflare stock, Source: Stock Screener

Cloud service market leader with best growth prospects Cloudflare is growing very strongly, as the cloud-based platform has clear unique selling points compared to the offerings of competitors. Due to the strong growth, the company’s stock, which was launched on the stock exchange at 15 USD in 2019, has been in an intact upward trend since the beginning of 2023 and even institutional large investors have recently bought significantly.