Shares of internet security and content delivery network Cloudflare (NYSE:NET) fell 21.9% in the after-market session after the company reported first-quarter revenue that narrowly missed analysts' forecasts, but its earnings per share and free cash flow came in above expectations. In addition, sales guidance for the next quarter fell short of the consensus estimates, and the full-year guidance was lowered, with management citing a weaker macro environment and longer sales cycles where potential customers may be scrutinizing their spend more.
What is the market telling us:
Cloudflare's shares are very volatile and over the last year have had 77 moves greater than 5%. But moves this big are very rare even for Cloudflare and that is indicating to us that this news had a significant impact on the market's perception of the business.
Cloudflare is up 3.09% since the beginning of the year, but at $44.52 per share it is still trading 53.3% below its 52-week high of $95.25 from April 2022. Investors who bought $1,000 worth of Cloudflare's shares at the IPO in September 2019 would now be looking at an investment worth $2,460.
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