Cloudflare Inc. (NET) is making waves in the tech world, and not just because of its impressive third-quarter earnings report. The company’s stock just flashed a classic bullish signal known as the Golden Cross, sending ripples through the technical trading community. This pattern, which occurs when a stock’s 50-day moving average crosses above its 200-day simple moving average (SMA), is often seen as a sign of potential long-term strength.
Cloudflare’s current price of $90.91 sits above key support levels, including its eight-day and 20-day SMAs, indicating strong momentum. While some selling pressure may occasionally test its resolve, the Golden Cross adds fuel to the fire, suggesting that buying pressure could propel NET stock higher.
The technical signal aligns perfectly with the company’s robust financial performance. Cloudflare’s third-quarter earnings report revealed a 28% year-over-year revenue growth, surpassing expectations. This growth was driven by the expansion of its enterprise segment, with customers generating over $100K in annual recurring revenue (ARR) increasing by 28% and now accounting for 67% of total revenue. This impressive growth trajectory, coupled with the Golden Cross, paints a picture of potential for significant gains in the future.
However, it’s not all smooth sailing. While Cloudflare is making significant strides in AI innovation with its launch of Workers AI, the company faces some headwinds. These include slowing revenue growth and a cautious outlook for the fourth quarter. Additionally, the stock’s forward P/E ratio remains on the higher side at 107.53, and the company’s heavy reliance on large enterprise clients introduces some revenue volatility.
Despite these challenges, Cloudflare’s commitment to innovation, coupled with its strong cash generation and revamped go-to-market strategy, positions the company for long-term growth. For technical traders, the Golden Cross and the expanding $100K+ customer base offer a promising outlook for NET, contingent on sustained demand from its largest clients. The future for Cloudflare remains uncertain, but the recent developments suggest that the company could be well-positioned to navigate the market headwinds and emerge stronger.
