Cloudflare Stock News: NET gains 19% as S&P 500 holds onto 5,000 level

Cloudflare (NET) stock has lost just 0.85% afterhours, trading at $107, after closing up 19.4% on Friday following a much better than expected quarterly earnings result announced late Thursday. The cybersecurity firm proved the doubters wrong as it produced quarterly sales for the fourth quarter that grew 32% from a year ago.

Revisions to the Consumer Price Index (CPI) seasonal adjustments on Friday showed that December inflation was somewhat lower than the official reading. This sparked a wave of buying on Wall Street, and the S&P 500 advanced 0.57%, while the NASDAQ Composite added 1.25%. The S&P 500 reached a new all-time high on Friday, ending the day for the first time ever above the 5,000 level at 5,026.

Cloudflare stock earnings news

Cloudflare produced Q4 adjusted earnings per share (EPS) of $0.15. That was 3 cents ahead of Wall Street analysts.

Revenue was the more exciting feature, and Cloudflare didn’t disappoint. Sales arrived at $362.5 million, whereas analyst consensus had called for $353 million. 

Operating cash flow and free cash flow reached company records in the quarter ending in December. The former arrived at more than $85 million, while the latter reached nearly $51 million.

The company named former Alteryx (AYX) CEO Mark Anderson as its new president of revenue.

CEO Matthew Prince said in a statement: "We had an exceptionally strong fourth quarter [...] and signed both our largest new customer win and largest customer renewal ever.”

Management predicted that Cloudflare will see sales of $373 million in Q1 and $1.65 billion for the entirety of 2024. These figures were largely in line, but adjusted EPS for the full year should arrive closer to $0.59, above the prior $0.56 forecast.

Cloudflare stock is now trading well above its $79 consensus price target on Wall Street. Morgan Stanley was out with a research note arguing this makes sense due to the current onslaught of cyberattacks in the second half of 2023. 

Cloudflare struck a three-year, $33 million security contract with the US Department of Commerce during the quarter. Total customers also gained 34% from a year ago.

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The S&P 500 is a widely followed stock price index which measures the performance of 500 publicly owned companies, and is seen as a broad measure of the US stock market. Each company’s influence on the computation of the index is weighted based on market capitalization. This is calculated by multiplying the number of publicly traded shares of the company by the share price. The S&P 500 index has achieved impressive returns – $1.00 invested in 1970 would have yielded a return of almost $192.00 in 2022. The average annual return since its inception in 1957 has been 11.9%.

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Cloudflare stock forecast

Cloudflare stock surged dramatically on Friday, outperforming its run afterhours on Thursday. However, traders decided to take profits toward the late afternoon. That is why the large gap up has produced a red candlestick on the daily chart: NET stock looks poised to close lower than its open, which is never a good sign.

The odds are that cybersecurity stock will trend down toward the 161.8% Fibonacci level at $98.85. This is near both the $100 psychological level and right where Bernstein analysts placed their price target, up from $85. Traders will expect resistance from the 261.8% Fibonacci at $111.65.

NET daily stock chart