Cloudflare(NET) Soars 1.64% on Earnings Optimism

Cloudflare(NET) shares surged 1.64% today, marking the fifth consecutive day of gains, with a total increase of 8.25% over the past five days. The stock price reached its highest level since November 2021, with an intraday gain of 1.96%.

The strategy of buying NET shares after they reached a recent high and holding for 1 week showed poor performance over the past 5 years. The annualized return was -3.5%, significantly underperforming the market and the stock itself. The maximum drawdown during this period was 35.7%, indicating significant volatility and risk. Given the underperformance and high volatility, this strategy is not recommended.

Cloudflare's stock price has been influenced by several key factors. The company's earnings estimates for the current quarter and fiscal year have been revised upward, reflecting investor optimism about its future performance. The consensus estimate for the current quarter has increased by 8.2%, while the estimate for the current fiscal year has risen by 0.9%.

Additionally, Cloudflare reported a 27% year-over-year revenue growth for the latest quarter, surpassing guidance. This strong business performance has positively impacted investor sentiment, contributing to the stock's recent gains. However, significant insider selling, including $3.3 million worth of shares sold by Co-Founder Matthew Prince, has raised concerns about insiders' confidence in the stock's future performance.

Furthermore, starting June 9, 2025, Russian ISPs have begun throttling access to sites and services protected by Cloudflare. This development could potentially impact Cloudflare's operations and lead to accessibility issues for its services, adding to the volatility in the stock price.