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Not the best quarter by $NET. While every company goes through ups and down, but I find it hard to believe the banking crisis and inefficiency of sales people are the true culprits here. The banking crisis took place towards the end of the quarter and $NET managed to produce better results in 2022 with the same salespeople in the similar macro environment.
Thoughts?
Down more than 25% after hours. It's an unprofitable company with a P/S ratio close to 20x. I don't think the market's reaction is unexpected.
The problem is not the business it's the valuation. When this macro slowdown is done a lot of growth companies might come to the 10-15% growth range together with Big Tech so the valuation have to reflect that in the short term.
They did reiterate its $5b target. In the near term though, it is not immune to recessionary pressure, no matter how mission critical its products may be
I think it's notable that the average return that $NET has given investors on Commonstock is now negative. Cloudflare was a high flyer during and after the pandemic. But now it has come back down to Earth.
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