Regardless of what happens to the AI models, you will still need protection a decade from now.
Not to mention the most comprehensive platform to use with AI, they will inevitably eat Lovable / Repl's lunch.
Lovable is hosted on Cloudflare: https://x.com/CloudflareDev/status/2113651157721600492
Staying in your lane is often a better choice.
Maybe expanding through acquisition is the best of both worlds. So replit might be bought.
Accurate. [0]
Personally, I think that the idea that market always recovers is so widespread right now that it'll take some serious financial hardships for people to start selling instead of buying the dip.
Even tepid regulation will destroy the "our TIA is the entire observable universe due to the potential of self replicating AI probes so we totally deserve 10 trillion dollars in investor capital" trade
Network effects make it harder for Cloudflare to build Replit than it might seem, too.
And the reason for Cloudflare to do it is because there are several (apparently) very juicy businesses to be built by slapping a chat UI and off the shelf coding agent on top of Cloudflare infra... Not saying they should do this, but the rationale is pretty self-evident.
The reason for Replit to try going down the stack is platform risk and compressing margins from competitors who also have the brilliant idea of slapping a text box and off the shelf coding agents onto Cloudflare.
At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don't need any transparency. You don't need any footnotes. What were you thinking?
Now this analysis is imperfect... but it's good enough.
For reference Cloudflare trades at 39x revenue
Share buybacks are always better for the company and investors.
As a retired ‘softie, my spouse still holds a fair bit of MSFT, so I just looked: $0.98…on a $540.00 stock. Yeah, we won’t be living off that in our old age.
Obviously you wouldn't pay 10x revenue if you expect revenue to be flat for the next 10 years.
No wonder that company no longer exists with a CEO that doesn't get that.
Here's the valuation though. Percentage of total web traffic going through Cloudflare.
- 2016 ~3.9%
- 2017 ~5.3%
- 2018 ~6.6%
- 2019 ~7.6%
- 2020 ~11.2%
- 2021 ~15.4%
- 2022 ~19.4%
- 2023 ~18.0%
- 2024 ~18.9%
- 2025 ~19.2%
- 2026 (early) ~20.9% (with later snapshots higher, up to the mid-to-high 20s)
Combine that with consistently excellent execution and popularity, you get the valuation.
You're confusing market share with valuation. Also, look into business cycle theory from marathon asset management.
The four most dangerous words in finance "this time is different"
As an example, Palantir has a similar cash flow / market cap ratio. I didn't check many others.
Kevin_Flynn•47m ago
Sobriety the following day,
$8,000 for a video card,
Empty boxes on Christmas day.
Can't even rhyme without AI anymore.
ddellacosta•30m ago
Wind blows over clear acres
Buildouts are now dead?
Kevin_Flynn•26m ago
Micron a little as well,
AI corps with their hands out ?
they can go to hell. :}
karim79•20m ago
Cost me 3090
Dunno why I did dis
Guess let's try and see