Is It Too Late To Consider Cloudflare After Its 74% Surge In 2025?

• Wondering if Cloudflare is still worth buying after its massive run, or if the stock has already priced in the hype? Let us unpack what the current share price is really implying about its future.
• Cloudflare is not exactly a quiet name, with the stock up 73.9% year to date and 73.6% over the last year, even after a recent 3.3% dip this week and a roughly flat 30 day move at down 0.3%.
• These swings have come as investors digest a steady stream of product launches and partnership announcements that reinforce Cloudflare's position in security, edge computing and developer tooling. Ongoing buzz around AI infrastructure and web performance has also kept the company in the spotlight, shaping how the market prices both its growth story and its risks.
• Despite that enthusiasm, Cloudflare currently scores just 0/6 on our valuation checks, meaning it does not screen as undervalued on any of them. Next, we will walk through the different ways to value the stock and, by the end, explore an even better way to make sense of what that valuation really means.

Cloudflare scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Cloudflare Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth today by projecting the cash it could generate in the future and then discounting those cash flows back to the present.

For Cloudflare, the model starts with last twelve months free cash flow of about $269.4 Million and uses analyst forecasts for the next few years. It then extends those trends further out to 2035 using Simply Wall St extrapolations. Under this 2 Stage Free Cash Flow to Equity approach, free cash flow is projected to rise from the current level to roughly $1.23 Billion by 2029 and continue climbing beyond that, all measured in $.

When those future cash flows are discounted back, the DCF model suggests an intrinsic value of about $84.66 per share. Compared with the current share price, this implies Cloudflare is around 131.1% overvalued on this metric, indicating that the market price reflects very optimistic growth assumptions.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Cloudflare may be overvalued by 131.1%. Discover 916 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Cloudflare.

Approach 2: Cloudflare Price vs Sales

For fast growing software and infrastructure businesses, revenue is often a cleaner yardstick than current profits, which can be held back by heavy investment. That makes the price to sales ratio a useful way to gauge how much investors are paying for each dollar of Cloudflare's revenue.

In general, higher growth and stronger competitive positioning can justify a higher sales multiple, while greater uncertainty or execution risk should push it lower. Cloudflare currently trades on a price to sales ratio of about 34.04x, which is extremely rich compared with the broader IT industry average of around 2.27x and also well above the peer group average of roughly 16.71x.

Simply Wall St's Fair Ratio framework goes a step further by estimating what a reasonable price to sales multiple should be, given Cloudflare's growth outlook, profitability profile, risk factors, industry and market cap. On this basis, Cloudflare's Fair Ratio is about 15.02x, which is meaningfully below the current 34.04x. That gap suggests the market is pricing in far more upside than the company's fundamentals alone would support.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1465 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Cloudflare Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Cloudflare’s story to concrete forecasts for its future revenue, earnings and margins, and then to a Fair Value you can compare with today’s share price.

On Simply Wall St’s Community page, Narratives let investors describe their perspective on a company, translate that story into numbers, and see a Fair Value that updates dynamically as new news, earnings or guidance arrives. This can help you decide whether Cloudflare is a buy, hold or sell as its price moves around that estimate.

For example, one Cloudflare Narrative might lean bullish, assuming accelerating AI driven growth, rising margins and a Fair Value close to the upper analyst target of about $255 per share. A more cautious Narrative could instead focus on competition, regulation and margin pressure, anchoring Fair Value nearer the $90 low target. By comparing either Fair Value to the current price, you can quickly see whether your story suggests the stock is attractively priced or too expensive right now.

Do you think there's more to the story for Cloudflare? Head over to our Community to see what others are saying!

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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