Cloudflare heads into its June 9 earnings report with options traders the most defensively positioned they have been all year.
The options signal is the sharpest data point in the setup. The put/call ratio has jumped to 0.70, more than two standard deviations above its 20-day average of 0.66 — a z-score of 2.14, near the highest reading of the past 52 weeks. That surge in put demand follows a brutal single-session selloff: the stock dropped nearly 7% on June 5 to $250.11, erasing much of the prior week's 3.4% gain. The combination of a sharp down day and elevated downside hedging suggests investors are bracing rather than pressing into the print.
Context for that caution isn't hard to find. The most recent earnings event, in May, sent the stock down more than 21% on the day and another 19.6% over the following five days. That reaction now looms large over how market participants are sizing their risk heading into Tuesday's release.
Short interest, however, tells a far quieter story. Bears have not pressed their advantage after May's wipeout. Short interest is essentially unchanged on the week at 2.8% of the free float — and borrow conditions are entirely uninspiring for short sellers: cost to borrow has eased to just 0.42%, and availability is extremely loose at over 5,000% of short interest. There is no structural squeeze pressure and no sign of a fresh short thesis building. The modest uptick in SI over the past month — about 6% in share terms — looks more like passive drift than conviction.
Analyst opinion has edged more constructive in recent weeks. Piper Sandler upgraded to Overweight in mid-April and raised its target to $250 after the May drop, while Mizuho trimmed its target to $235 from $255 following the earnings shock. The consensus mean target of $236 now sits slightly below the current price — a modest inversion that reflects a Street still digesting the May selloff rather than actively cutting. Bulls point to Cloudflare's revenue growth trajectory, its expanding zero-trust and AI networking footprint, and a remarkable forward EPS growth profile ranked in the 98th percentile across the universe. Bears counter with a P/E above 200x, an EV/EBITDA near 125x, and the risk that heavy enterprise revenue concentration leaves the top line exposed to any softening in IT budgets. Insider selling adds a minor note of caution: director Carl Ledbetter sold approximately $3.7 million in shares on June 1, just days before the print, though all trades carry a low significance score and the broader 90-day net insider position is actually slightly positive in share terms.
The June 9 print therefore tests whether NET's Q1 execution — particularly enterprise net new logos and any update on AI-driven demand signals — can give the Street a reason to re-anchor targets above the current price, or whether a second consecutive disappointing quarter confirms the valuation premium has further to unwind.
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