Elon Musk’s privately held spacecraft and satellite communications company, SpaceX, has teamed up with Cloudflare (NYSE:NET), an internet solutions and cloud-based cybersecurity service provider, to enhance the performance of Starlink, its satellite internet service. The Information first reported the news.
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Following the report, Cloudflare stock closed 5.54% higher on Wednesday. Further, its stock was up about 3.63% in the pre-market session on August 24.
Through this move, Starlink is looking for ways to increase its network of mini data centers, which will eventually help the company offer faster network speed. While SpaceX is working with Cloudflare to enhance its network speed, it has turned profitable, which is positive. The company posted a profit of $55 million in Q1. Moreover, it delivered revenues of $1.5 billion.
Things are heading in the right direction for SpaceX as it continues to strengthen its satellite internet service. The company is benefitting from a record number of successful rocket launches into orbit.
From Cloudflare’s perspective, the company may definitely gain from its association with SpaceX as it continues to face macro headwinds that have pressured enterprise spending on cybersecurity.
Is Cloudflare a Buy, Sell, or Hold?
While lower enterprise spending is a concern, the large addressable market, new product launches, ability to win new customers, and opportunities from AI (Artificial Intelligence) keep analysts cautiously optimistic about the Cloudflare stock.
It has received eight Buy, seven Hold, and three Sell recommendations for a Moderate Buy consensus rating on TipRanks. Analysts’ average price target of $68.78 implies 8.98% upside potential from current levels.
