• If you are wondering whether Cloudflare's share price still makes sense after a strong run in recent years, the key question now is how that price stacks up against what the business may be worth.
• The stock recently closed at US$219.67, with the share price down 17.2% over the past week, up 13.5% over the past month, up 12.1% year to date and up 22.2% over the past year, while the three year return sits at a very large level and the five year return is 131.8%.
• Recent headlines have focused on Cloudflare as one of the larger listed infrastructure providers in the AI and internet security space, with frequent references to its role in content delivery, security and developer tooling. That kind of attention can influence how investors think about the stock's growth opportunities and the risks they are taking at current prices.
• Against that backdrop, Cloudflare currently has a valuation score of 0 out of 6. This article will walk through what different valuation approaches say about the stock today, and then finish with a way to tie those methods together so you can judge the price in a more complete way.

Cloudflare scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Cloudflare Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes estimates of a company’s future cash flows and discounts them back to today using a required return, to arrive at an estimate of what the business could be worth right now.

For Cloudflare, the model used here is a 2 Stage Free Cash Flow to Equity approach. The company’s latest twelve month free cash flow is about US$287.3 million. Analyst estimates and subsequent extrapolations project free cash flow reaching US$2.1b by 2030, with intermediate yearly projections stepping up between 2026 and 2035. Simply Wall St uses analyst forecasts where available, then extends those cash flows beyond the explicit forecast period.

Discounting those projected cash flows back to today results in an estimated intrinsic value of US$147.91 per share. Compared with the recent share price of US$219.67, the DCF output suggests the stock is around 48.5% above this intrinsic estimate, which points to a price that screens as rich on this model alone.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Cloudflare may be overvalued by 48.5%. Discover 47 high quality undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Cloudflare Price vs Sales

For companies that are still building toward consistent profitability, the P/S ratio is often more useful than P/E, because it compares the stock price to revenue rather than earnings that can be small or negative.

Growth expectations and risk still matter, because investors usually accept a higher P/S ratio when they expect stronger revenue growth or see the business as relatively predictable, and look for a lower multiple when growth is more modest or risks are higher.

Cloudflare currently trades on a P/S ratio of 33.34x. That sits well above the broader IT industry average of 1.67x and also above the peer average of 11.76x. Simply Wall St’s Fair Ratio for Cloudflare is 14.58x, which is the P/S multiple that would typically be expected given factors such as its revenue growth outlook, margins, industry, market value and risk profile.

This Fair Ratio is more tailored than a simple comparison with sector averages or peers because it adjusts for company specific characteristics rather than assuming every business in the group should trade on the same multiple. Setting 14.58x against the current 33.34x suggests the stock is priced well above this Fair Ratio.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Cloudflare Narrative

Earlier it was mentioned that there is an even better way to understand valuation, and on Simply Wall St this is done through Narratives. You choose or create a story for Cloudflare that links your view of its business drivers to explicit forecasts for revenue, earnings and margins. These then roll up into a Fair Value that you can compare with the current price inside the Community page. For example, one Cloudflare Narrative on the platform might lean toward a higher Fair Value around US$318.00 based on strong AI and Zero Trust adoption, while another might lean toward a lower Fair Value near US$148.41 based on regulatory and competition risks. As new information like earnings or news is added, those Narratives and their Fair Values update so you can quickly see whether your chosen story still supports holding, adding or trimming the stock.

For Cloudflare, however, we will make it really easy for you with previews of two leading Cloudflare Narratives:

Start with the bullish case. This leans toward a higher fair value based on strong AI and security demand, but also highlights some important risks to watch.

🐂 Cloudflare Bull Case.

Fair value: US$234.18

Gap to this fair value vs the last close of US$219.67: the current price sits about 6.2% below this narrative fair value.

Revenue growth used in this narrative: 27.59% a year.

• Analysts in this camp anchor on rapid adoption of cloud native security, zero trust and AI related workloads supporting revenue growth, higher average spend per customer and improved customer retention.
• They factor in improving profitability as Cloudflare scales its platform, manages costs and looks for new high margin opportunities such as transaction based models around the Agentic Web and Act 4 initiatives.
• They still flag real risks, including customer concentration, regulation, margin pressure and uncertain monetization of newer products, and point out that the consensus fair value of US$234.18 sits below some of the more optimistic price targets.

Now set that against a more cautious narrative. This gives more weight to regulatory, competitive and execution risks and lands on a meaningfully lower fair value.

🐻 Cloudflare Bear Case.

Fair value: US$148.41

Gap to this fair value vs the last close of US$219.67: the current price sits about 32.2% above this narrative fair value.

Revenue growth used in this narrative: 27.47% a year.

• This view focuses on rising regulatory and geopolitical pressures, data sovereignty rules and sustainability requirements that could increase costs, limit market reach and weigh on long term margins.
• It also places more weight on competition from hyperscalers, open source tools and bundled security offerings that may reduce pricing power, pressure gross margins and soften net revenue retention over time.
• Even so, it acknowledges that Cloudflare still has growth drivers in areas like Workers AI, Zero Trust and Act 4, but argues that the current share price already assumes a lot of future earnings power, which is why the fair value estimate of US$148.41 sits well below the last close.

If you want to go beyond these previews and see how other investors are framing Cloudflare across bull, bear and middle ground views, it is worth spending a few minutes with the live Community Narratives, where you can compare assumptions, risks and fair values side by side.

Do you think there's more to the story for Cloudflare? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.