Confluent (CFLT) Valuation Check After Mixed Returns And Ongoing IBM Acquisition Debate

Why Confluent (CFLT) is on investors’ radar today

Confluent (CFLT) is drawing attention after recent share performance data highlighted contrasting returns, including a gain over the past 3 months and a decline across the past year. This pattern is prompting fresh questions about its valuation.

See our latest analysis for Confluent.

The recent 34.86% 3 month share price return contrasts with a 12.31% decline in 1 year total shareholder return. This suggests that momentum has picked up again, even though longer term holders have yet to see a recovery.

If Confluent’s recent move has you looking beyond a single name, this could be a good moment to size up 58 profitable AI stocks that aren't just burning cash as potential next ideas on your list.

With Confluent trading at US$30.56, only around 1% below the average analyst price target and with a calculated intrinsic value that sits higher than today’s price, you have to ask yourself: is this a chance to buy, or is the market already pricing in future growth?

Most Popular Narrative: 30% Undervalued

Confluent’s most followed narrative pegs fair value at about $30.65, almost level with the last close at $30.56, yet still frames the shares as undervalued.

Analysts trimmed their fair value estimate for Confluent slightly from about $30.77 to $30.65. This reflects a mix of cautious views around the pending IBM acquisition and downgrades, as well as more upbeat commentary on stabilizing cloud growth, improving margins, and ongoing product momentum that supports a lower assumed future P/E multiple.

Recent research has highlighted a split in how professionals view Confluent. Some are focused on execution and product momentum, while others center on the pending IBM takeover and deal mechanics.

Read the complete narrative.

Want to see what kind of revenue path, margin lift and future earnings multiple have to come together to support that valuation? The full narrative lays out a very specific growth runway, a profitability shift and a premium future P/E assumption that is far from ordinary. If you are curious which of those inputs does most of the heavy lifting in the model, the details are all there.

Result: Fair Value of $30.65 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still clear pressure points, including slower cloud consumption trends and competitive threats from open source or self managed alternatives that could challenge this upbeat scenario.

Find out about the key risks to this Confluent narrative.

Another View: Price Suggests a Richer Story

That 30% undervalued narrative sits uncomfortably against how the market is actually pricing Confluent today. On a P/S of 9.4x, the shares trade well above the US Software average of 3.6x, the peer average of 6.4x, and even our fair ratio of 7x. That kind of gap can signal either upside conviction or valuation risk. Which side do you think you are on?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Confluent Narrative

If you are not sold on this view or prefer to rely on your own homework, you can develop a custom Confluent thesis in just a few minutes: Do it your way.

A great starting point for your Confluent research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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