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1 Top Growth Stock Down 31% You May Regret Not Buying Right Now as It Could Soar 91%

A strong revenue pipeline and a large end-market opportunity suggest that Cloudflare (NET -2.27%) has the potential to bounce back and soar higher.

Cloudflare had a strong start to 2024, with impressive results in February driving its shares up. However, a disappointing quarterly report last week caused the stock to plummet by 16%. Currently trading 31% below its recent high, let’s explore what went wrong and why this dip could be a chance for smart investors to grab a growth stock.

Although Cloudflare’s Q1 revenue rose by 30% to $379 million, surpassing expectations, its guidance fell short of Wall Street’s hopes. The company’s forecast for the current quarter and full year didn’t meet analyst estimates, leading to the stock’s decline.

Despite this setback, Cloudflare’s growth prospects remain promising. The company is steadily acquiring new customers and increasing its share of their spending. It ended the first quarter with over 197,000 paying customers, including a significant rise in high-paying customers. Additionally, the company’s dollar-based net retention rate stayed strong at 115%.

Cloudflare’s performance obligations also saw a substantial year-over-year increase, indicating a solid future revenue pipeline. With an enhanced earnings outlook and an expected compound annual growth rate of 62% over the next five years, the company is poised for significant bottom-line growth.

Furthermore, Cloudflare envisions its addressable market expanding to $204 billion by 2026, suggesting ample room for revenue growth in the long term. These factors point to a potential stock price increase of 91% in five years, making it a compelling investment opportunity.

In conclusion, considering Cloudflare’s growth trajectory and market potential, investing in this cloud stock at present could prove to be a wise decision.

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