Cloudflare, Inc. (NYSE:NET) President and COO Michelle Zatlyn has sold a significant portion of her holdings in the company, according to a recent filing. The transactions, which took place over multiple days, involved the sale of shares at prices ranging from $74.08 to $75.27, totaling over $6.4 million.
The sales were executed under a pre-arranged Rule 10b5-1 trading plan, which allows insiders to sell shares at predetermined times to avoid any accusations of trading on non-public information. The trading plan had been adopted by Zatlyn on November 27, 2023.
On May 20, 2024, Zatlyn sold 37,557 shares at an average price of $74.77 and another batch of 20,738 shares at an average price of $75.27. The following day, she continued with the sale of 9,009 shares at an average price of $74.38 and 1,247 shares at $75.03. On May 22, 2024, Zatlyn sold an additional 10,176 shares at $74.08 and a final batch of 80 shares at $74.60.
The transactions have significantly reduced Zatlyn’s direct holdings in the company, as reported in the filing. However, it's worth noting that the sales represent only a portion of her overall stake in Cloudflare, as she has indirect ownership through trusts and retains a substantial number of shares in the company.
Investors often monitor insider sales to gauge the confidence level of management in the company's future prospects. Although such sales are not necessarily indicative of the company’s performance, they can sometimes provide insights into an insider's view of the company's valuation.
Cloudflare has not made any official statement regarding the transactions, and it is standard practice for executives to diversify their investment portfolios.
InvestingPro Insights
Amidst the news of Cloudflare's COO divesting a portion of her stake in the company, investors may find it valuable to assess the current financial health and market sentiment surrounding Cloudflare, Inc. (NYSE:NET). According to InvestingPro, Cloudflare boasts a robust gross profit margin of 76.78% over the last twelve months as of Q1 2024, highlighting the company's ability to maintain profitability in its core operations. This metric is particularly noteworthy as it underscores Cloudflare's competitive advantage in the cloud services industry.
InvestingPro data also shows that Cloudflare has experienced a significant 31.51% revenue growth during the same period, indicating a strong expansion in its customer base and product adoption. However, it's important to note that the company's P/E ratio stands at -138.13, reflecting investor speculation about future earnings potential rather than current profitability. Cloudflare's market cap is currently valued at $25.49 billion USD, suggesting that the market still holds a positive long-term view of the company's value proposition and growth trajectory.
InvestingPro Tips further reveal that analysts are optimistic about Cloudflare's future, with 16 analysts having revised their earnings upwards for the upcoming period. This consensus indicates that the market expects Cloudflare to continue its growth trend. Additionally, while the company has not been profitable over the last twelve months, analysts predict profitability this year, which could be a pivotal factor for investors considering the company's stock.
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