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Here's How Cloudflare Shares Gained 12% in July

By Anders Bylund – Updated Aug 6, 2021 at 8:12AM

Key Points

  • The delta variant of the virus behind COVID-19 led to spiking infection rates in July, threatening to extend the global health crisis.
  • Cloudflare would benefit from a longer crisis.

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Market makers celebrated Cloudflare's position of quiet leadership in an exciting growth market last month -- like they have been doing throughout the coronavirus crisis.

What happened

Shares of Cloudflare (NET -1.58%) rose 12.1% in July, according to data from S&P Global Market Intelligence. The stock surged as the delta variant of the coronavirus caused a spike in infection rates, threatening to extend the pandemic. That would boost the fortunes of companies that benefit from lockdowns and remote-work policies.

So what

The delta variant's emergence lifted Cloudflare higher than most of its cloud computing and network security peers. The company offers a unique combination of security and performance tools, setting Cloudflare up for some of the most exciting growth prospects among large-cap network security experts.

A rocket takes off from a tablet computer's screen.

Image source: Getty Images.

Now what

Cloudflare underscored July's gains with a solid second-quarter report on Aug. 5. Sales rose 53% year over year, and bottom-line losses inched closer to break-even once again. The results exceeded Wall Street's consensus estimates and Cloudflare followed up with strong revenue guidance for the third quarter and the full year.

The stock has nearly tripled over the last year, posting a 52-week gain of 186% by Thursday's closing bell. The stock isn't cheap, but you get what you pay for -- a growth-focused leader in a large and expanding market sector. So it's not surprising to see investors embracing Cloudflare and its skyrocketing stock, even in a fairly quiet month.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Cloudflare, Inc. The Motley Fool has a disclosure policy.

Stocks Mentioned

Cloudflare Stock Quote
$48.42 (-1.58%) $0.78

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