CloudFlare (NYSE:NET): Q3 Non-GAAP EPS of -$0.02 beats by $0.03; GAAP EPS of -$0.09 misses by $0.02.
Revenue of $114.2M (+54.5% Y/Y) beats by $11.02M.
GAAP gross profit was $87.2M, or 76.3% gross margin, compared to $57.9M, or 78.3%, in Q3 2019.
Strong large customer growth, adding a record of roughly 100 net large enterprise customers in the quarter, in addition to our first $10M ARR customer.
Awesome numbers! Kinda regret selling out of NET a few days ago, but oh well, here’s to learning how to be an even better investor
Awesome numbers! Kinda regret selling out of NET a few days ago
Hi Wolf, I’m just curious, why in the world would anyone have sold out of Cloudflare a few days ago? I’m not being sarcastic, just curious, as I doubled my position a week ago, all excited about their two weeks of announcing twenty or so astonishing new products that won’t even count in this earnings, but when in the last available quarter they signed up 61 TIMES as many paying customers as their competitor Fastly, and 11 times as many enterprise customers. Also considering that they had given a mass of customers a free ride for six months because of COVID, and the free ride was expiring in September, and considering that they were growing at 48%. They just seemed and still seem to have everything going for them. Did you have a reason for exiting them? I can’t remember seeing anyone on the board talk about exiting them or advising it.
Hi there Saul, thanks a lot for your reply! And first of all sorry in advance since this post will be largely OT!
Well, to be honest kinda stupid emotional reasons! I was up almost 100% in NET and afraid of the imminent drop after the earnings report that I thought was about to come (was pondering all kinds of stupid reasons like ‘cash flow will still be negative’, etc). Took my money and put it into PTON since I was super sure they would have awesome numbers. Haha yeah, hindsight is always 20-20.
Oh well, like I said, there is still a lot that I have yet to learn. Should have read the knowledge base some more times I let my feelings get the better of me instead of listening to reason (or the well founded opinions of you guys) but, and that’s a big but, I feel like I learn something everytime I do stupid stuff like this!
Thanks again for running this board Saul, I really feel like it helps me and I guess so many more people tremendously!!
All the best,
Wolf, emotions can be the most challenging aspect of investing because you’re dealing with probabilities and the unknown. HP Lovecraft once wrote, “The oldest and strongest emotion of mankind is fear, and the oldest and strongest kind of fear is fear of the unknown.” It may seem like an odd quote for an investment forum, but it certainly applies. Selling out of fear is almost always a bad idea, especially if there’s no news to warrant it. There are a number of ways you can potentially deal with it.
First, if your position is making you lose sleep at night maybe it’s too large for comfort. Only you know if that’s true.
Then, if your stock has run up a lot as it did in your case and you’re afraid of a correction why not simply trim it a little? At almost 100% profit, you could’ve even taken your initial investment off the table and essentially have a free position. At least then you could still participate in future gains.
JP Morgan was once asked what the market would do. His response was “fluctuate.” No one knows what a stock will do other than that, but if you focus on the business and its prospects instead of its stock price you’ll probably be less likely to make poor and emotional decisions. Even a 50% drop in a stock today barely looks like a blip on a long-term chart. Maintaining perspective and a long-term view should keep you invested as long as your thesis for owning the stock is still intact.
“… focus on the business and its prospects instead of its stock price you’ll probably be less likely to make poor and emotional decisions.”
Good post, Prospero13.
I relearned that lesson this week when I bought FSLY on price rather than DOCU on its merits. So, I missed the DOCU 13% gain; the market’s way of tempering my emotions.
Well, to be honest kinda stupid emotional reasons! I was up almost 100% in NET and afraid of the imminent drop after the earnings report that I thought was about to come…
Hi Wolf, thanks for your response. It sounds as if you were scared because of the price rise, which is a natural response. But you have to think whether there is a good reason for the price rise, and in this case there was. As I wrote in the KB, I NEVER sell out of a position because it has gone up, or doubled, or whatever. If the position has gotten so large it makes me uncomfortable (like when Zoom hit 31% of my portfolio), I’ll trim it, but I won’t sell out unless the story has changed. Think of it this way: when Amazon went from $5 to $10 (split adjusted) you might have exited because it was up 100%. Well now it is at $3300 and something. It was up 100% again when it hit $20, and 100% again when it hit $40, and $80, etc. Getting out because the price has gone up really limits your gains.
A link to the Knowledgebase for this board is in the Announcements panel that is on the right side of every page on this board.