Buy Cloudflare. Get Laughed At. See Who's Laughing In A Year.
Repeat After Us: It's Always Opposite Day On Wall Street
Summary
We can always be wrong but … Cloudflare sure looks like a buy to us.
The company has huge ambition, strong and improving fundamentals.
The stock has been thrown under a bus.
Today the stock hit an important technical level which to us indicates a high confidence buy.
We walk you through the logic below and comment on potential stop placement by way of insurance against The Big One.
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The X Factor
Some companies have the X factor and whilst we all get it wrong sometimes, we think Cloudflare ($NET) has it. Here's the holy trinity:
Founder-CEO with missionary zeal and a positively evil glint in the eye, all wrapped up in a hey-I'm-a-good-guy-really-look-I-wear-an-old-sweater-most-of-the-time package.
Huge addressable market which is expanding due to internal product development cadence.
Actual financial execution as evidenced by topline growth and slowly-improving margins, still lossmaking but looking like they will get to cash generation.
Two other companies that looked like this not so long ago? Amazon ($AMZN) and Tesla ($TSLA). They worked out OK for us and a couple other investors too. And we think $NET might - just might - be following a similar pattern.