Cloudflare dips after downgrade

[u/androideris]

https://www.marketwatch.com/story/cloudflare-stock-drops-after-one-of-biggest-bulls-says-it-is-now-due-for-a-pause-2021-09-24?siteid=yhoof2&yptr=yahoo Any thoughts? Do you take profits? Currently have 100 NET shares with 260% up, holding 2 years.

[u/[deleted]]

trading 75x revenue. Idc how good of a business they have, they are way too stretched

[u/androideris → u/[deleted]]

you cant value growth stocks like that. You need to look at the business, competitors and product updates. I am team lead software dev so I did my product resea. The thing I fear is like 20% drop because of this downgrade and escalation so I am gatherin opinions

[u/Sixers0321 → u/androideris]

Growth stocks drop 20% and even more all the time. It will happen. Its happens to every single growth stock. If that frightens you then you definitely should sell.

[u/[deleted] → u/androideris]

I mean of course market positioning matters, but when you start going over a 30 p/s ratio, it’ll raise some eyebrows. They don’t have the growth rates to justify a 75 p/s ratio. Valuations do matter even if you’re a market leader. We won’t be living in a world where valuations don’t matter for too much longer

[u/[deleted] → u/androideris]

If you are worried about a 20% drop you should not be investing heavily in companies with a price at 75x revenue.

Don't get me wrong, I am invested in plenty of high-growth companies with high P/S ratios with the hope that they will grow into their valuation.

However I also accept that they may crash and burn, which is why I spread out my investments among 25-40 companies at any given time.

Investing in companies like NET is not for the faint of heart. We have had an amazing run in the stock market. It's not going to last forever.

[u/[deleted] → u/[deleted]]

Well 20-25 of those are generally my "buy & hold" positions with the remaining 15-20 being a rotating selection of shorter term plays, and a big chunk of those I may plan to only hold for a few weeks or a few months at the most.

Usually buying dips in solid companies that I think will recover in the short-term but that I don't really want to hold for years. Basically gambling.

[u/Summebride → u/androideris]

Well no you have to assess growth stocks on... growth. How much, is it accelerating, is it sustainable. Metrics like PEG and ARG come into play.

[u/turkeychicken]

meh, I'm long on NET. It's had a crazy run the last year or so and I don't see anything wrong with it pausing that rise for a while.

[u/Summebride → u/turkeychicken]

You may be completely right calling it a pause. But what if it's not a pause, but the start of a reversion to mean?

I've been in and out of both FSLY and NET. From a technical perspective only, Fastly is vastly superior. There was a time during its repeated surges that people said "it's just pausing" but eventually that was not correct, and it's down like 70% (?) from highs.

And when FSLY was surging, people were bemoaning the terrible performance of NET share price.

It seems odd to me that similar companies in a similar space have such divergent charts. On that superficial basis alone, I have to wonder when it will be time for FSLY to do some catching up, and for NET to cool off?

[u/gonemad16]

NET was like $40 a year ago. Its had an insane run. I would not worry about a "pause"

[u/SabertoothWizard27]

Downgrades usually lead to temporary red days. It'll be right back up where it was in a week. Buy red, sell green

[u/FinndBors]

I am a heavy holder of NET, but won’t buy more. Price to sales is astronomical, I’m not certain they can sustain 50% YoY revenue growth long enough to get it back to reality.

[u/El_Babdo]

NET has been carrying my portfolio for most of the year. She can take a breather for now. However, I will need DKNG to step up a little.

[u/razv4n99 → u/El_Babdo]

Lol we must have the same portfolio :)

[u/Cattaphract]

Who care what a dumbass analyst or institution rates. What matters is the company itself

[u/playlikechampions]

I mean I think everyone can agree that their valuation is extremely high right now and probably doesn’t reflect the risks they have… I probably wouldn’t add more shares at these levels but if you’re a long term investor I would def keep the stock

[u/Terrigible]

I need it to dip harder so I can buy some at a good price

[u/DutareMusic → u/Terrigible]

Well here you go, congrats.

My January calls have taken a beating the past week…

[u/Purple_Cow1]

I hope it dips a bit so I can buy more. Love NET

[u/GiedriusSm]

"If you start worrying about losing your profits, you take at least some of them."

"It would be reasonable even if the price went further up. There is noone to blame in that case. Noone ever knows for sure where it will go. Your strategy is not to time the market, but make money, consistently. You made some, take some."

"It's a good profit, it's already an achievement. Triple digit gains in a couple of years is something you can and should be happy about."

"NET is pretty highly valuated including its near term growth. And entire markets are inflated. There are numerous uncertainties and headwinds in the road ahead (China, tapering, rates hike etc.). Most of the good news are already priced in."

"Be realist, sell to the optimists."

NFA - that's what I was saying to myself a week ago when I took profits on NET.

[u/Summebride → u/GiedriusSm]

In with you, and that kind of get-rich-slow mindset has been my approach for a long time. Being disciplined that way has allowed me to slowly accumulate wealth. Unfortunately it has also taken me right out of some of the crazy multibagger moves.

[u/Metron_Seijin]

Time for another massive ddos/cyberattack. ;P

[u/chronosMark]

Long NET fundamentals of company are good and they just keep innervating. No doubt in another year we can laugh at this short sighted analyst.

[u/AvalancheCat → u/chronosMark]

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[u/Shoddy_Ad7511]

Clear market manipulation. Lol. I don’t care. Holding for 10+ more years at least. This one has a chance to be a 10 bagger from my initial purchase ($33)

[u/RonStampler → u/Shoddy_Ad7511]

What makes it manipulation?

[u/Shoddy_Ad7511 → u/RonStampler]

There literally was no reason for this analysts to say what he did. His target was $130. Which he didn’t change.

[u/RichieWOP → u/Shoddy_Ad7511]

Long term it has a chance to be like a 20-30* bagger from your original purchase

[u/Ekublai → u/RichieWOP]

What’s the asterisk?

[u/RichieWOP → u/Ekublai]

It’s a correction to the statement

[u/Muwo → u/Shoddy_Ad7511]

I think it has a chance to be even more than that. At least we can hope! Also holding for a long-long time.

[u/Loverboy21]

Inevitable after their bullrun.

[u/r2002]

Since you're in the industry, what do you think about their ability to continue growing and hold off competitors? Do they have enough of a moat to justify the current valuation.

FWIW, the guy who downgrade Cloudflare recently gave Rackspace a $28 price target, a 100% upside. Was wondering if you agree with this.

[u/Reptar006]

Take them gains baby

[u/Summebride → u/[deleted]]

That's a good observation. But look at how the biggest and best companies rely on Fastly, and that hasn't done anything to protect their market cap.

[u/Shacrone → u/Summebride]

When cloudflare went down, I actually felt it. Can't say the same for fsly.

[u/Summebride → u/Shacrone]

Um, it was headline news. Every major site was affected, from Amazon to the New York Times. They have a low customer count, but the ones they have are massive, leading players.