Jimmy Investor
Former Equity Analyst
Cloudflare is difficult to buy at about 30x EV/sales because a lot is already priced in, even after a good quarter. Q1 revenue rose 34% to $640 million versus $623 million expected and EPS of $0.25 beat, with strong AI and agentic traction, but remaining performance obligations of $2.54 billion fell short of the roughly $2.61 billion expected. It also announced a 20% workforce reduction. x.comÂ
Cloudflare's valuation, about 28.5x EV/ARR and 453x run-rate GAAP EBIT, leaves little room for its competitive risks. Its SASE and developer-platform businesses face Zscaler, Palo Alto and hyperscalers with far bigger budgets, and OpenAI and Anthropic may keep inference on their own backends. The bull case is crisp and arguably priced in: bot security and edge workloads matter more as agents spread, growth sped up from 27% to 34%, and weekly agent requests doubled in January. 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 Q2 beat-and-raise shows growth holding above 35% as it becomes an AI-era platform for networking, security, edge computing and agent infrastructure. Revenue rose 36% to $696M versus $666M expected, current RPO grew 35%, and full-year revenue guidance rose again to $2.86-2.87B. Its CEO says traffic is shifting toward AI-to-AI and agent-to-agent interaction. Non-GAAP gross margin fell 320 bps to 73.1% and layoff charges drove a GAAP loss, but neither affects cash flow or guidance. … Show more
Cloudflare cannot justify a bullish view at a 10000x revenue valuation. x.comÂ
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 may be the strongest software play on agentic AI in the public markets. 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 a short because 45-50x sales is too much to pay for 35% growth. x.comÂ
Cloudflare is trying to make its network the control layer for more internet and AI traffic, not sell one more point product. Its CDN already sits close to users and applications on a global edge, a natural place to add security, Zero Trust, developer compute and AI controls such as Workers AI. Q1 2026 supports this: revenue up 33.5%, $2.54B of RPO and 118% net retention. The case holds if consolidation keeps showing up in adoption; the main risks are valuation and execution. x.comÂ
Cloudflare's business outlook looks very bullish, but the stock needs to fall back below $200 before even a small position makes sense. Cloudflare sees a need for a payment processor that can handle millions or tens of millions of transactions per second to support microtransactions on the agentic web, and its recent fireside chat was very bullish. x.com x.comÂ
