Cloudflare Inc (NET: US)
12-month performance: NA
Insider activity: Bearish
Selling pattern: Large sales from venture capital funds
Recent news: Strong Q1 results
Cloudflare is a US technology company that focuses on web infrastructure and security. Operating a global network that spans over 200 cities in 95 countries, the company provides a comprehensive suite of products that delivers security, performance, and reliability to businesses. It is listed on the New York Stock Exchange and currently has a market capitalisation of $11.2 billion.
Cloudflare shares have had a good run since the company’s IPO in September last year. Driven by strong first-quarter results – in which revenue was up 48% year-on-year – and bullish sentiment towards the cybersecurity sector in the wake of Covid-19, the shares have risen from the IPO price of $15 up to $43. That represents a gain of 187% in roughly 10 months.
Source : 2iQ Research
What we think is interesting here is that in the last month, a number of major insiders have offloaded Cloudflare stock. On 6 July, Venrock Associates sold seven million NET shares, generating proceeds of $263 million. Meanwhile, between 15-16 June, Pelion Ventures sold 2.2 million NET shares, generating total proceeds of $68 million. Both of these venture capital firms were early investors in Cloudflare. In our view, this selling activity from these venture capital firms is a bearish signal. It suggests that insiders see risk to the downside after the recent share price rise