On May 24, 2023, Matthew Prince, CEO & Chair of the Board, and 10% Owner of Cloudflare Inc (NYSE:NET), sold 157,152 shares of the company's stock. This insider sell comes amidst a year where Prince has sold a total of 1,885,824 shares and purchased none.
Who is Matthew Prince?
Matthew Prince is the co-founder, CEO, and Chair of the Board of Cloudflare Inc. He has been with the company since its inception in 2009. Under his leadership, Cloudflare has grown to become a leading provider of web infrastructure and website security services, serving millions of customers worldwide.
Cloudflare Inc's Business Description
Cloudflare Inc is a US-based company that provides a wide range of web infrastructure and website security services. Its solutions include content delivery, DDoS protection, domain name server services, web application firewalls, and SSL/TLS encryption. Cloudflare's services are designed to enhance the performance, security, and reliability of websites and other Internet properties. The company serves customers across various industries, including e-commerce, media, technology, and government organizations.
Insider Buy/Sell Analysis and Relationship with Stock Price
Over the past year, there have been no insider buys for Cloudflare Inc, while there have been 41 insider sells. This trend could indicate that insiders believe the stock is overvalued or that they are taking profits after a period of growth. However, it is essential to consider other factors, such as the company's financial performance and market conditions, before drawing any conclusions.
On the day of Matthew Prince's recent sell, Cloudflare Inc's shares were trading at $56.74 apiece, giving the stock a market cap of $20,293.089 million. Despite the insider selling activity, the stock's valuation appears to be significantly undervalued based on its GuruFocus Value of $131.43 and a price-to-GF-Value ratio of 0.43.
GuruFocus Value and Valuation
The GuruFocus Value is an intrinsic value estimate developed by GuruFocus, calculated based on the following three factors:
- Historical multiples (price-earnings ratio, price-sales ratio, price-book ratio, and price-to-free cash flow) that the stock has traded at.
- A GuruFocus adjustment factor based on the company's past returns and growth.
- Future estimates of business performance from Morningstar analysts.
With a price of $56.74 and a GuruFocus Value of $131.43, Cloudflare Inc has a price-to-GF-Value ratio of 0.43, indicating that the stock is significantly undervalued. This could present an opportunity for investors to buy shares at a discounted price, considering the company's growth potential and strong market position.
Conclusion
While the recent insider sell by Matthew Prince and the overall trend of insider selling in the past year may raise concerns, it is crucial to consider the broader context of Cloudflare Inc's business performance and valuation. The stock appears to be significantly undervalued based on its price-to-GF-Value ratio, which could present an attractive opportunity for investors. As always, thorough research and analysis are necessary before making any investment decisions.
