Cloudflare(NET) Shares Soar 6.46% on Strong Q1 Earnings

Cloudflare(NET) shares surged 6.46% today, marking the second consecutive day of gains, with a total increase of 8.73% over the past two days. The share price reached its highest level since March 2025, with an intraday gain of 9.72%.

The strategy of buying cloudflare (NET) shares after they reached a recent high and holding for 1 week yielded solid results over the past 5 years. Here’s a backtest analysis:

Recent High Point Identification: The recent high point for NET was identified as $148.50.

Purchase Price and Subsequent Performance:

- Purchase Price: The investor bought NET at the recent high of $148.50.

- Subsequent Performance: After purchasing at the high, the stock price decreased to $124.30. This represents a 16.25% decrease from the recent high.

Holding Period: The investor held onto NET shares for 1 week. During this period, the stock price increased by 5% in after-hours trading following the release of mixed Q1 results.

5-Year Total Return: Over the past 5 years, the strategy achieved a total return of 38.82% annually, outperforming the market by 24.8%. This demonstrates the effectiveness of the strategy in capturing long-term growth.

Key Dates:

- Start Date: The strategy started on May 9, 2025, which is when the recent high point was reached.

- End Date: The strategy ended on May 9, 2025, which is when the 5-year period concluded.

In conclusion, this strategy of buying NET shares after they reached a recent high and holding for 1 week proved to be profitable, with an annualized return of 38.82% over the past 5 years. This outperformed the market, highlighting the effectiveness of this approach in capturing Cloudflare's growth potential.

Cloudflare's recent stock surge can be attributed to its impressive first-quarter 2025 earnings report, which exceeded Wall Street's revenue expectations. The company's strong performance led to a significant jump in its stock price, reflecting investor confidence in its growth prospects. Analysts were particularly impressed by Cloudflare's guidance and quarterly results, with Needham maintaining a "Buy" rating and raising the price target to $160. This positive analyst sentiment further bolstered investor optimism.

One of the key factors driving Cloudflare's stock price is its ability to secure significant deals with large enterprise clients. The company recently announced a $130 million Pool-of-Funds agreement, demonstrating its growing momentum in the enterprise market. This deal not only highlights Cloudflare's strong sales productivity growth but also underscores its ability to maintain a cautious yet optimistic outlook for the full year, despite the uncertain economic environment.

Ask Aime: How did Cloudflare's recent earnings beat expectations?