Investors ignore increasing losses at Cloudflare (NYSE:NET) as stock jumps 5.4% this past week

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Cloudflare, Inc. (NYSE:NET) share price has soared 110% in the last three years. That sort of return is as solid as granite. And in the last month, the share price has gained 30%.

Since it's been a strong week for Cloudflare shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for Cloudflare

Because Cloudflare made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last 3 years Cloudflare saw its revenue grow at 40% per year. That's much better than most loss-making companies. Meanwhile, the share price performance has been pretty solid at 28% compound over three years. But it does seem like the market is paying attention to strong revenue growth. That's not to say we think the share price is too high. In fact, it might be worth keeping an eye on this one.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free report showing analyst forecasts should help you form a view on Cloudflare

A Different Perspective

We're pleased to report that Cloudflare rewarded shareholders with a total shareholder return of 3.8% over the last year. The TSR has been even better over three years, coming in at 28% per year. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 1 warning sign for Cloudflare that you should be aware of before investing here.

We will like Cloudflare better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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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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