The year 2020 has been good to net-services provider Cloudflare Inc. (NYSE: NET). In fact, Cloudflare’s share price rose from $17.17 on 3 January 2020 to $39.73 on 7 July 2020.
Thus, Cloudflare is retaining its share value during a pandemic. Hence, Cloudflare could be a safe technology stock for the coronavirus age.
Moreover, Cloudflare is a cheap stock in a growth area; cloud and internet sphere. Hence, Cloudflare could be a safe growth stock.
What is Cloudflare?
Cloudflare (NYSE: NET) operates one of the world’s largest networks. In fact, Cloudflare claims 27 million internet properties use its network.
Additionally, Cloudflare claims over 13% of Fortune 1,000 companies host over one billion unique IP addresses on its cloud each day. Cloudfare offers a powerful Edge Network they design to be fast, safe, resistant to attacks, and reliable.
Plus, Cloudflare offers services in dozens of cities all over the world. Thus, Cloudflare has the infrastructure big business needs when tens of millions of people are working from home.
Why Investors Want Cloudflare?
In addition, many people are relying on the internet for their shopping, finance, and entertainment. Importantly Cloudflare supports streaming video with Cloudflare Stream and Stream delivery products.
Coronavirus is driving internet usage to record highs. For instance, Comscore estimates in-home data usage in the United States grew by 18% between 1 March 2020 and 17 March 2020, ZDNet reveals.
For example, in-data usage for connected grew by 27% between March 2019 and March 2020, ZDNet estimates. Plus, use of smart phone figures grew by 30% in the same period.
Hence, internet usage is exploding and more customers than ever depend upon web-based products. Cloudflare benefits because it offers secure web services at such a time.
Does Cloudflare Make Money?
Cloudflare (NYSE: NET) loses money. For instance, Cloudflare reported a -$36.07 million quarterly operating loss on 31 March 2020. However, that quarterly operating loss fell from -$41.09 million on 31 December 2019.
Moreover, Cloudflare’s quarterly revenues grew from $73.94 million on New Year’s Eve to $91.25 million on 31 March 2020. Impressively, Cloudflare’s quarterly profit grew from $57.91 million to $70.43 million in the same period.
Cloudflare also burns cash because it reported a quarterly operating cash flow of -$14.28 million on 31 March 2020. Conversely, Cloudflare reported a quarterly ending cash flow of $117.91 million on 31 March 2020.
How Much Cash Does Cloudflare Have?
Consequently, Cloudflare reported $587.85 million in cash and short-term investments on 31 March 2020. However, Cloudflare’s cash and short-term investments fell from $636.95 million on 31 December 2019.
Plus, Cloudflare reported $858.53 million in total assets on 31 March 2020. Those assets grew from $830.82 million on 31 comparison, the latest Cloudflare long-debt figure was $10.51 million from 31 December 2019.
I think Cloudflare’s debt is shrinking because its financing cash flow fell from $572.26 million fell from -$4.68 million on 30 September 2019. To explain, cash from financing represents the amount of cash a company raises by selling debt. However, Cloudlflare raised $572.26 million in debt in the quarter ending on 30 September 2019.
Is Cloudflare a Good Dividend Stock?
Cloudflare (NYSE: NET) could be a good long-term speculative investment because it is cheap.
However, Cloudflare is not a safe investment for ordinary people because it pays no dividend. I think only investors who can afford to live without dividend income should investigate Cloudflare. Everybody who needs regular income needs to look elsewhere.
Cloudflare is growing fast in the coronavirus age. However, it offers no income and insignificant amounts of cash. Thus, I call Cloudflare a stock for ordinary people to watch rather than buy.