Over the years, investors in web security and content delivery company Cloudflare (NYSE:NET) have enjoyed outstanding returns. But this begs the question: will a buy-and-hold position in NET stock continue to benefit the shareholders?
Just to give you a quick primer, Cloudflare (as the name implies) operates a cloud-based platform. The company ended 2021’s second quarter with 126,735 paying customers, representing an increase of 32% on a year-over-year basis.
So obviously, this is a fast-growing business immersed in a high-conviction market segment. Indeed, an argument could be made that NET stock is one of the best cloud investments available.
At the same time, some folks might be concerned about a recent downturn in the share price. Yet, as Cloudflare pushes the envelope in web speed and security, there’s no need for the investors to panic-sell now.
NET Stock at a Glance
What’s interesting about NET stock is that it went basically nowhere from January to May of this year, and then boom — the buyers took over.
Perhaps it was because the need for cybersecurity came into focus, right around the time when the Colonial Pipeline breach exposed vulnerabilities in computer networks.
This put Cloudflare in a great position as a company that solves cybersecurity problems. As a result, the company’s stakeholders enjoyed a terrific summer.
After languishing near $70 for months on end, NET stock sprinted relentlessly to a 52-week high of $137 in September. However, the bears were apparently waiting in the wings. In late September, the share price pulled back to $115 in just a few days.
It was a nasty drawdown, but should this be a deal breaker?
The longer-term momentum is still to the upside, as no key technical levels have been broken. It’s just a dip within a powerful uptrend — more of an opportunity than a reason to panic, really.
A Faster Network for All
Here’s a novel concept: What if a company dared to offer a service, which could speed up millions of websites, automatically and for free?
This might sound unfeasible, but Cloudflare is a company that manages to do what some would consider to be impossible.
Not long ago, Cloudflare revealed that it’s implementing server support for Early Hints. This is a new internet standard, which can help speed up websites on its network by 30% or more … for free. Through Early Hints, Cloudflare is working directly with commonly used browsers to save time for websites to load.
By providing “hints,” Cloudflare will let the browsers know to start loading critical webpage elements before the server completes the processing time to load the page. Moreover, Cloudflare is able to do this without requiring any additional actions from the server.
This could become a standard practice in how webpages are loaded — and Cloudflare would enhance its reputation as a business that innovates.
Making E-mail More Secure
In case that wasn’t enough for you, Cloudflare is also tackling the issue of e-mail security head-on with free e-mail routing and anti-phishing configurations.
Cloudflare’s customers are encouraged to sign up for early access to Advanced Email Security Suite — and to enjoy the benefits, like being able to create custom e-mail addresses, manage incoming e-mail routing, and prevent e-mail spoofing and phishing on outgoing e-mails.
Plus, these features are all provided for free. It’s hard to imagine that these security enhancing services won’t be popular, and mutually beneficial.
As Cloudflare co-founder and CEO Matthew Prince explained, his company is seeking to be the go-to network which businesses of any size can plug into for all of their needs. “While today marks our first step into this space, we ultimately hope to become the leader in email security,” Prince added.
The Takeaway
Folks who have owned NET stock for a while, shouldn’t view the share-price pullback as a sell signal.
If anything, it’s a chance to add to one’s position. After all, the uptrend is still intact.
Just as importantly, Cloudflare remains an ambitious innovator that still offers tremendous value in multiple tech niches. Therefore, it makes sense for investors to stay in the trade for the long term.
— Louis Navellier and the InvestorPlace Research Staff
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Source: Investor Place