Cloudflare heads into its May 7 earnings release riding a quiet rally, with positioning data that tells a notably unworried story.
The stock closed at $217.50 on May 1, up 6% on the day and 5% over the week — a strong move into the print. Yet the borrow market shows no sign of stress. Cost to borrow has eased to 0.43%, down 17% over the past week and near the low end of a year-long range. Availability in the lending pool is effectively wide open, with borrow demand trivially small relative to supply. Short interest at 2.6% of the free float is modest and has barely moved — up 5.5% in share count over the week, but the absolute level remains unexciting. The ORTEX short score of 31.5 sits comfortably in the lower half of the universe, consistent with a stock where short sellers are not pressing a thesis. Options traders are equally relaxed: the put/call ratio of 0.58 is fractionally below its 20-day average of 0.59, nearly half a standard deviation to the call-heavy side, and well below the 52-week high of 0.77. There is no meaningful defensive skew heading into results.
The analyst debate centres on whether Cloudflare's growth can hold its premium against a tightening margin profile. The bull case rests on strong Q4 momentum — 34% revenue growth, a 120% dollar-based net retention rate, and 74% year-on-year growth in new ARR — alongside a 12-month forward EPS growth estimate ranking in the 91st percentile of the universe. Bears point in a different direction: new RPO growth is projected to decelerate roughly 10%, operating income and EPS guidance for 2026 came in below consensus, and gross margins have compressed, making it harder to justify a forward EV/EBITDA above 113x. Piper Sandler upgraded to Overweight in mid-April, keeping a $222 target, while Mizuho trimmed its target to $235 from $255 — a signal that the Street sees the growth story intact but is increasingly selective on the entry price. The mean analyst target of $231.85 implies only modest upside from current levels, a gap that has narrowed sharply after the recent rally.
One pattern worth noting on the ownership side: co-founder and President Michelle Zatlyn sold approximately $10 million of stock across April 20–22, in a series of transactions in the $200–212 range. That brings the 90-day insider net activity to around $22.8 million in net sales. These look like planned disposals rather than a conviction call — trade significance scores are low — but they do mean insiders have been reducing exposure at prices below where the stock trades today. JP Morgan Asset Management added over 2.5 million shares in Q1, one of the more meaningful institutional accumulation moves in the register.
The May 7 print will therefore test whether Cloudflare's Q1 revenue growth rate and updated full-year guidance are enough to close the gap between the bull case on customer expansion and the bear case on margin trajectory — and whether current valuation, after a 6% day, still leaves room for the Street to reward the outcome.
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