Rose Celine Investments
Equity Investor
Cloudflare's roughly $100 billion valuation is hard to justify because it is unclear how shareholders make money at this price. A post the author replies to calls it an amazing company and product at nosebleed multiples; another notes it converts only about 30% of revenue into cash, and stock-based compensation makes that worse. Positive EPS alongside negative net income reflects non-GAAP versus GAAP figures. x.com x.com x.com x.comÂ
Cloudflare cannot justify a bullish view at a 10000x revenue valuation. x.comÂ
Cloudflare at 38x NTM revenue and 150x NTM EBITDA is insane, so a decent return from here is unlikely even though it is the leader. That has never happened before without massive acceleration in growth rates and margin expansion. x.comÂ
Cloudflare's importance becomes clearest during outages, when disruption exposes how much of the internet depends on its platform. That dependence makes the stock hard to sell despite its obscene valuation. x.comÂ
Cloudflare has never needed to break even because investors keep funding it. In business since 2009, it still runs a -10% operating margin, sustained by fund managers buying the new stock it issues every quarter, equal to 18% of revenue. It still trades at 31x 2026 revenue despite a supposed SaaS bear market. x.com x.comÂ
Cloudflare looks absurdly valued at about $120B in market cap on a $2.7B revenue run rate, roughly 45x annualized quarterly revenue, while it still loses money on a GAAP basis. x.com x.com x.comÂ
Cloudflare is just getting started while most cybersecurity names have already begun their run, having built a multi-month base as fundamentals improve. Revenue is expected to grow from $2.3B over the last twelve months to $4.6B by 2028, with EPS inflecting positive. x.comÂ
ServiceNow's costs are rising far faster than revenue without the RPO acceleration management promised. Q3 revenue rose 21%, while total cost of revenue climbed 56% and net income fell 45%; stock compensation appears to be using about half of free cash flow. The selloff looks deserved, though the shares are now closer to fair value. Sustainable margins and measurable returns remain the test. x.com x.com x.com x.com x.com x.comÂ
Cloudflare's stock price is far beyond what the company can ever pay back to shareholders. Even if free cash flow quadrupled next year to $250 million, or reached $1 billion annually, investors would only earn back their investment around 2106. SpaceX conceivably offers more optionality through Starlink. x.comÂ
Cloudflare is one of the names leading this market and likely to lead the next leg higher, as an emerging leader in data inference and a core piece of internet DNS infrastructure. That positioning helped it avoid sustained weakness like its 81% drawdown in 2022 and 50% pullback in April 2025. With the market within 3% of all-time highs, there is little reason to bottom fish in names still down 50%+, though Cloudflare remains very expensive. x.com x.comÂ
Cloudflare's valuation leaves almost no return even under generous assumptions, so buyers at $330 risk being patsies. If it grows 15% every year through 2041, with non-GAAP margins rising to 50% and a 6% terminal value, the stock would compound at only about 0.6% a year. x.comÂ
