To my amazement, after recommending SentinelOne, Bert is back recommending Cloudflare. His article is now a free article on Seeking Alpha. As I remember though, after 3 days it goes behind a firewall so you shouldn’t delay.
It’s to my amazement as Bert is a very value-oriented guy. As I mentioned in my post about his recommendation of Sentinel, that Tip Ranks rates him #20 out of 24,000+ analysts so in the top 1/1000th of them, or top 1/10th of 1% . I seem to remember that Tip Ranks gets their ranking based on how the analyst’s picks do in the six months or a year after he or she recommends them. Here’s a link to the article: Cloudflare: Recommending This Fallen Angel (NYSE:NET) | Seeking Alpha
And here is his opening summary:
Summary
Cloudflare, Inc.'s quarter reported last month was judged to be an inadequate beat, and guidance was muted.
Cloudflare, like almost all other IT vendors, is suffering from a case of macro headwinds.
These headwinds do nothing whatsoever to impinge on the longer-term outlook for the company.
Cloudflare is the most rapidly growing content delivery vendor, and it vies with Zscaler as a leader in the zero-trust cyber security space.
For investors with patience, and with the fortitude to deal with extreme volatility, the current Cloudflare valuation is an attractive entry point.
Saul, to your last point about patient investors I am of the opinion that Cloudflare can be considered a set and forget investment. Though few (if any) investors that follow your philosophy practice “buy and hold,” I think that Cloudflare is a perfect investment for an inattentive investor. Enough so that I recommended it to my daughter, who takes no interest in quarterly reports and financial news in general.
Unlike most SaaS vendors, Cloudflare has high CapEx as they’ve made heavy investments in data centers. Cloudflare has a data center in 275 cities across 100 cities spanning the globe. These data centers provide highly responsive CDN services to their ever growing legion of customers. I don’t recall the exact number, but they have an internet connection within a few milliseconds for somewhere in the vicinity of 95% of the world’s population.
Cloudflare releases new products at a dizzying rate. I don’t know how many products they actually offer, and a look at the products page of the Cloudflare doesn’t list them, rather they provide six headings that categorize them by intended user groups.
Speaking of their website, it is neatly tailored to today’s fast paced, short attention span folks - designed for the TikTok generation. Clickable headings on clean uncluttered pages. Elsewhere, short, concise one or two sentence info bytes under the headings. Informative graphics are used generously. Numerous pages sport short videos with brief, explanatory notes.
One such heading I will point out in particular, the second heading on the Solutions page is “Easier alternative to Zscaler.” CEO Mathew Prince is not shy about calling out the competition by name.
I second your recommendation to read Bert’s article before it disappears. I also encourage folks to browse Cloudflare.com.
One last thing, their pricing is arranged in tiers with the lowest entry level being $0.00 which buys a surprising level of functionality. What’s not to like about this company?
Hi Brittlerock, I think that the following quote from Bert was the most profound for me. It really made me stop and think:
Cloudflare, like almost all other IT vendors, is suffering from a case of macro headwinds. These headwinds do nothing whatsoever to impinge on the longer-term outlook for the company.
Wow, the thought that these current macro headwinds don’t change the long term outlook for the company really blew me away. It’s so true but so easy to overlook in the current craziness.