Cloudflare Inc (NET)

Cloudflare Inc (NET) stock plummeted by 16.38% following the company’s second-quarter revenue projections, which fell short of analysts’ expectations. The San Francisco-based security company estimated that revenue would total $393.5 million to $394.5 million in the second quarter, with the midpoint of the range missing analysts’ estimates of $394.5 million. The second-quarter revenue outlook falling short of expectations sparks concerns about the company’s ability to maintain its current growth rate, Bloomberg Intelligence said in a note. Cloudflare and its peers have faced headwinds in recent months as businesses scaled back IT spending. For Cloudflare, the revenue projection overshadowed what was otherwise a solid beat in first-quarter results for the company. It posted adjusted earnings of 16 cents per share, up from a year earlier and beating analysts’ estimates of 13 cents. Cloudflare’s first-quarter sales of $378.6 million beat analysts’ estimates of $373.7 million. Analysts have said that Cloudflare was taking share from rivals with cloud-based offerings on its content-delivery network, while a sales-force restructuring gained traction, which pointed toward improved momentum. New product launches and signing larger enterprise accounts may help the company steady revenue growth going forward. Still, ongoing pressure on IT budgets and greater scrutiny of deals remain near-term threats, Bloomberg Intelligence analysts note.

Cloudflare Inc Stock (NET) dropped by 6.57% from $62.51 to $58.40 in the trading on Tuesday October 3, 2023. The reasons why stock NET down today includes:

• Macro economy: All stocks were pummeled after a stronger-than-expected job openings report was released, with 9.61 million job openings, above the 8.8 million projected for August. That appears to have increased chances for more Fed interest rate hikes.
• Bond yields: Rising long-term bond yields are damaging for cybersecurity group stocks as the bulk of their earnings power typically rests many years out into the future. So, the higher that long-term inflation projections and interest rates are today, the less those future profits are worth in today's terms.