Insider Buying

Insider Buying Report: Cloudflare Inc (NET:US)

Cloudflare Inc
(NET:US)
12 months:
-19.17%
Activity:
Bullish
Pattern:
Large purchase from board member
News:
Q1 results
Cloudflare Inc
(NET:US)
12 months:
-19.17%
Activity:
Bullish
Pattern:
Large purchase from board member
News:
Q1 results
Cloudflare Inc's logo is with a cloud's 3D model with a glowing digital pattern on top and binary numbers lined and rising from above it

Insider buying can provide clues about a stock’s next move. Insiders sell company stock for many reasons. Yet they only buy stock for one reason – they expect it to rise.

In this report, we are going to highlight some interesting insider buying at Cloudflare Inc (NET:US). Cloudflare is a web performance and security company that has around 150,000 paying customers worldwide. Its solutions are designed to help businesses secure and accelerate their websites, apps, and APIs. The company is listed on the New York Stock Exchange and currently has a market capitalization of $18.7 billion.

Cloudflare Inc: Insider Buying

Our insider transaction data shows that on May 9, board member Maria Eitel purchased 15,000 Cloudflare shares at a price of $62.77 per share. This trade cost the insider $941,606 and increased her holding to 21,622 shares.

Cloudflare Inc (NET:US) Group price fluctuations from May 2021 to May 2022 are shown in the chart below from 2iQ Alpha Terminal

High-Conviction Trade

This trade was part of a pre-arranged 10b5-1 trading plan that was adopted in February 2022. However, we still think it’s worth highlighting.

One reason why is that the trade represents the first purchase from a Cloudflare insider since the company’s Initial Public Offering (IPO) in 2019.

Another reason is that it is substantial in size, and it has boosted the insider’s holding by 227%. This indicates that she is very confident in relation to the stock’s prospects.

Share Price Weakness

Like many tech stocks, Cloudflare has underperformed in 2022. Recently, the stock plummeted from $90 to below $60 after Q1 results. As a result, it’s now down around 50% year to date.

However, the Q1 results weren’t terrible. For the period, revenue came in at $212.2 million, up 54% year on year, and ahead of the consensus forecast of $206 million. Meanwhile, non-GAAP adjusted earnings per share of $0.01 was ahead of the earnings estimate of $0.00. The number of large customers spending more than $1 million per year rose 72% year on year.

Revenue guidance was ahead of estimates too. For the second quarter of 2022, Cloudflare said it expects to generate revenue of between $226.5 million and $227.5 million. The average analyst estimate was $217.76 million. For the full year, it expects sales to be between $955 million and $959 million, a range that was also significantly higher than the $932.44 million analyst forecast.

“Cloudflare had a terrific first quarter of 2022, beating expectations with revenue growth up 54% year-over-year and adding more than 14,000 new paying customers – a quarterly record,” said Matthew Prince, Co-Founder and CEO.

After the recent share price fall, the stock still looks expensive. However, Ms. Eitel clearly sees value at current levels. We see her large purchase as a bullish indicator.

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