Cloudflare Soars in IPO

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  • Company marks successful IPO.

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  • Shares of Cloudflare started trading on the New York Stock Exchange under the ticker NET. The company had an IPO price of $15 per share, but rallied about 20 percent to $18 per share in early trading.

    The company’s IPO is the biggest tech IPO in recent months, and raised $525 million for the company, which now trades with a market cap of $1.4 billion.

    Founded in 2009, Cloudflare operates a cloud platform delivering a variety of services to businesses worldwide, including software-as-a-service applications, Internet of Things devices, and other security and network needs.

    Action to take: While we tend to shy away from IPOs until they can build up an operating history as a stock, particularly at companies that still have a problem growing revenue, Cloudflare’s IPO price was reasonable, and shares didn’t soar away from an extreme value.

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  • Like many tech names, the company is still showing an operating loss, but is growing revenue at nearly 50 percent per year, and has a strong position in the cloud space to succeed, unlike many companies that go public before they can get fully established.

    While shares could certainly come back down in a market correction, they look attractive under $19 per share. Options will start trading in a few weeks, so until then, speculators will have to sit on the sidelines.