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Why Cloudflare Stock Is Jumping This Week

By Daniel Sparks – Oct 8, 2021 at 6:07AM

Key Points

  • Broader market momentum for growth tech stocks may be the primary driver for the stock's gain.
  • Shares have soared 80% this year.
  • Investors love the company's accelerating revenue growth.

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The sharp gain comes after a beatdown last week.

What happened

Shares of edge network software specialist Cloudflare (NET -0.51%) are surging this week. At its highest point during the week, the growth stock was up 19.2%. As of the market close on Thursday, the stock's total gain so far this week was 18.9%.

The rise is likely due to a few bullish days in the overall market this week. Many growth stocks like Cloudflare performed especially well.

Arrows pointing up

Image source: Getty Images.

So what

After the tech-heavy Nasdaq Composite was pummeled on Monday, falling more than 2%, the index has been rising nicely. It rose 1.3% on Tuesday, 0.5% on Wednesday, and 1.1% on Thursday. Many growth tech stocks like Cloudflare, however, rose even more on these trading days.

The stock's gain on Thursday likely also reflects a rebound in the price following some brutal trading days last week that left shares down 15%.

Now what

Zooming out from these volatile few weeks, shares of Cloudflare have performed very well this year. The stock is up 80% year to date, crushing the Nasdaq Composite's 14% gain over this same period.

The company's accelerating revenue growth and its high dollar-based net retention rate have been winning over investors.

Capturing the company's momentum, management recently guided for total fiscal 2021 revenue to be between $629 million and $633 million, up from just $431 million in fiscal 2020. 

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Cloudflare, Inc. The Motley Fool has a disclosure policy.

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