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288 points bfirsh | 3 comments | 17 Nov 25 14:11 UTC | HN request time: 0.057s | source
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redwood ◴[17 Nov 25 15:15 UTC] No.45954306[source]▶
Cloudflare is one of those companies similar to palantir where the valuation just makes you scratch your head. But bringing in AI to try and fill out the AI valuation makes some sense I suppose
replies(3): >>45954496 #>>45954644 #>>45955066 #
NicoJuicy ◴[17 Nov 25 15:36 UTC] No.45954496[source]▶
Really?

Cloudflare isn't solely a CDN anymore. CDN and DDOS-protection were the most logical "first" products to build based on their SDN ( Software Defined Networking).

A cloud is the next thing and there's a lot of money involved with the cloud. I see them as the only real competitor/challenger to Azure, AWS, GCE, ... because they aren't bound to regions ( less DevOps)

For example, what you might not know about Durable Objects => https://boristane.com/blog/what-are-cloudflare-durable-objec...

replies(1): >>45954561 #
redwood ◴[17 Nov 25 15:41 UTC] No.45954561[source]▶
I'm not saying they're not an interesting company I'm just reflecting on their extraordinary valuation multiple which puts them in a unique league that are predominantly AI bets. Their founder is uniquely strong storyteller. If you look at their capital investment it's just not anywhere close to a top tier cloud player.. so while they offer some interesting building blocks it's just not clear that large workloads move there anytime soon

(https://substackcdn.com/image/fetch/$s_!-PwA!,f_auto,q_auto:...)

replies(1): >>45954621 #
NicoJuicy ◴[17 Nov 25 15:47 UTC] No.45954621[source]▶
Cloudflare went x 10 since their IPO 6 years ago ( stocks).

Revenue:

$ 85 million (2016)

$ 287 million (2019) IPO year

$ 1,670 million (2024)

$ 2,154 million (2025)

https://www.macrotrends.net/stocks/charts/NET/cloudflare/rev...

That's not a crazy valuation multiple considering their growth.

Palentir is a body shop. Cloudflare is infrastructure/cloud. Very big difference ( at least to me)

Stock ( Cloudflare - https://finance.yahoo.com/quote/NET/holders/ ): 90.87% % of Shares Held by Institutions

Stock ( Palantir - https://finance.yahoo.com/quote/PLTR/holders/): 60.09% % of Shares Held by Institutions

replies(1): >>45954730 #
1. redwood ◴[17 Nov 25 15:57 UTC] No.45954730[source]▶
It's not a question of crazy or not, it's just an extreme end of the multiple spectrum.. and the company is not in a positive operating margin position. So you're right they have a strong track record and there's optimism they turn a profit, but it's highly speculative. Nothing wrong with that. Just makes sense they are fleshing out their AI story while they're in a position to invest with equity IMO
replies(1): >>45954775 #
2. NicoJuicy ◴[17 Nov 25 15:59 UTC] No.45954775[source]▶
Their not investing with equity. Cloudflare is cash flow positive and re-investing.
replies(1): >>45955433 #
3. redwood ◴[17 Nov 25 16:55 UTC] No.45955433[source]▶
Well I'd assume the acquisition is with equity and that much of their employee compensation comes from equity, neither of which show up in a free cash flow view. Still you do make a good point. I'd have expected bigger capital costs that even if amortized would show up on cash flow some of the time.. but they appear to run a very tight capex ship. So more security SaaS than cloud provider IMO