Great discussion here. It has forced me to really look at the company in a new light and perspective.
Like others here, I have also owned Cloudflare for many years. I have been a pretty strong believer in the company and expected them to grow for years to come. In my opinion, there are clearly chinks in the armor and I am starting to question this belief.
There is a lot of gold in this thread which aligns with how I am starting to think about things such as
These quotes summarize how I am starting to feel about Cloudflare. Ultimately, rubber has to meet the road eventually and Cloudflare seems to be piling one excuse on top of another. As the posters above point out, the narrative is deviating from the numbers.
My biggest complaint this quarter is the fact that leadership decided to point to the uncertainty with the macro environment for not raising the full year guide. This feels like a bit of BS to me. A year ago I would have had no issues with this statement but it feels out of place today.
For example, the word macro was not mentioned once during either the Google or Microsoft earnings calls. Cloudflare claims they have a good sense for the macro environment since they are so ingrained with the internet but I would argue these trillion dollar businesses probably have their finger on the pulse of the economy a bit better and they don’t seem to have any issues with the environment.
In summary, it feels like I am taking off the rose colored glasses and looking at Cloudflare in a new light. I used to give the CEO Prince the benefit of the doubt but the cars salesman comment is starting to feel more accurate given all the talk and not so much walk.
One other interesting tidbit with my Cloudflare allocation - I have not added to my position since late 2022. Meanwhile, I have added to nearly every other stock in my portfolio within the last year as I like to add when I see things going in the right direction or what I see as a good price. Point being, I haven’t felt that way about Cloudflare in some time and have reduced the position greatly over the last couple years.
I expect to further reduce my stake as I am questioning just how dominant this company will become. If they can’t grow meaningfully at this scale with all the new additions of the AI tailwinds, what does that foretell for the future?
Rex
P.S. Management has also been real quiet about their goal of achieving a $5B run rate by late 2027. I think we can throw that out of the window..