Could Cloudflare's (NET) Blockchain Bet Reveal Its Next Competitive Edge in Cloud and Payments?

• Earlier this month, Cloudflare participated in the 1st Annual Austin C-Level Technology Leadership Summit, with Field CTO John Engates presenting and discussing industry innovation at the Austin Country Club in Texas.
• Cloudflare's recent support for the rapidly expanding x402 blockchain payment protocol, alongside speculation about sector M&A activity, has drawn fresh attention to its evolving position in cloud and payment technologies.
• We'll explore how Cloudflare's support of the high-growth x402 blockchain protocol influences its investment narrative and long-term opportunities.

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Cloudflare Investment Narrative Recap

To own Cloudflare stock, I think you have to believe in the company's ability to leverage cloud infrastructure and security expertise into new, high-growth opportunities across payments and AI. The company's support for the x402 blockchain payment protocol draws attention to these ambitions; however, the main short-term catalyst remains enterprise platform adoption, while margin compression from ongoing product investment is the key risk. The impact of the x402 news on these drivers does not appear material at this stage.

Of all recent company developments, Cloudflare and Coinbase's plan to establish the x402 Foundation stands out as most relevant. This effort to develop open digital payment standards builds on Cloudflare's expanding presence in data security and payment infrastructure, sectors that align closely with long-term growth catalysts such as increasing demand for resilient transaction networks and enhanced cybersecurity.

By contrast, investors should also be aware of the risk around sequentially declining gross margins from sustained R&D and network spend...

Read the full narrative on Cloudflare (it's free!)

Cloudflare's outlook anticipates $3.8 billion in revenue and $176.4 million in earnings by 2028. This scenario assumes annual revenue growth of 26.5% and a $293.5 million increase in earnings from -$117.1 million today.

Uncover how Cloudflare's forecasts yield a $209.01 fair value, a 7% downside to its current price.

Exploring Other Perspectives

Simply Wall St Community members expressed wide-ranging fair value estimates for Cloudflare, from US$11.58 to US$209.01 across 28 submissions. While many look to strong revenue momentum as a catalyst, opinions on future earnings potential and path to profitability vary greatly, prompting a closer look at diverse approaches to company value.

Explore 28 other fair value estimates on Cloudflare - why the stock might be worth less than half the current price!

Build Your Own Cloudflare Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Cloudflare research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.
• Our free Cloudflare research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Cloudflare's overall financial health at a glance.

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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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