Cloudflare (NET) Stock: Mastercard Partnership and Market Selloff Explained

TLDR

• Cloudflare and Mastercard announced a cybersecurity partnership on February 17 targeting small businesses, government, and critical infrastructure.
• The deal combines Mastercard’s Recorded Future and RiskRecon tools with Cloudflare’s Application Security portfolio.
• NET stock faced a market selloff following Anthropic’s launch of Claude Code Security, despite Barclays saying it’s not a direct competitor.
• Cloudflare’s revenue grew 27.7% over three years, but the company still runs at a negative operating margin of -9.28%.
• Insider selling of 472,372 shares over the past three months has raised some eyebrows among investors.

Cloudflare (NET) made headlines this week with two separate developments — a major partnership announcement and an unexpected market selloff.

Cloudflare, Inc., NET

On February 17, Cloudflare confirmed a strategic collaboration with Mastercard. The deal brings together Mastercard’s Recorded Future threat intelligence and RiskRecon attack surface monitoring with Cloudflare’s Application Security portfolio.

The goal is straightforward: help small businesses, critical infrastructure operators, and government organizations identify and fix cyber vulnerabilities faster.

The combined service will help organizations find internet-exposed assets they may not even know exist, assess vulnerabilities, and deploy security tools like web application firewalls and encryption quickly.

Users will get access to continuously updated cyber risk assessments and prioritized threat analytics, all accessible through Cloudflare’s dashboard.

It’s a practical solution for organizations that often lack the internal resources to manage an expanding digital footprint.

Market Selloff After Anthropic Launch

While the Mastercard news was broadly positive, NET stock got caught in a broader selloff of security-related names following Anthropic’s unveiling of Claude Code Security — a developer-focused tool currently in trial.

Barclays pushed back on that reaction. The bank said it finds the widespread selloff in security stocks “perplexing,” and does not view Claude Code Security as a direct competitor to Cloudflare’s existing business.

Barclays maintained that the market reaction appears disproportionate to the actual competitive threat posed by the new tool.

DZ Bank had separately upgraded NET earlier in February, turning more constructive on the stock heading into these developments.

Financials and Valuation

Cloudflare’s financials tell a mixed story. Revenue has grown 27.7% over the past three years, showing strong demand for its services.

But profitability remains elusive. The company carries a negative operating margin of -9.28% and a net margin of -4.72%, meaning it’s still spending more than it earns at the bottom line.

On the balance sheet, Cloudflare holds a current ratio of 1.98, suggesting it can cover short-term obligations. Its debt-to-equity ratio of 2.41, however, points to meaningful leverage.

The Altman Z-Score of 9.16 signals solid financial health, and a Beneish M-Score of -2.94 suggests low risk of earnings manipulation.

Valuation, though, is stretched. NET trades at a price-to-sales ratio of 28.5 — well above historical medians — and a price-to-book ratio of 42.71. The stock carries a market cap of $62.37 billion.

Analyst consensus sits at a moderate buy, with an average target price of $233.63 and a recommendation score of 2.2.

The RSI of 54.91 puts the stock in neutral territory — neither overbought nor oversold.

What may be harder to ignore: insiders sold 472,372 shares over the past three months. That level of selling by company executives tends to attract attention regardless of broader context.

Cloudflare’s beta of 2.07 reflects high volatility, which has been on display this week.

The GF Value estimate places NET at $142.25, with the stock currently flagged as modestly overvalued.

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