NET
Cloudflare Inc
Price:  
124.23 
USD
Volume:  
2,621,106.00
United States | Software
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Cloudflare WACC - Weighted Average Cost of Capital

The WACC of Cloudflare Inc (NET) is 10.6%.

The Cost of Equity of Cloudflare Inc (NET) is 10.80%.
The Cost of Debt of Cloudflare Inc (NET) is 5.50%.

Range Selected
Cost of equity 9.60% - 12.00% 10.80%
Tax rate 4.10% - 4.70% 4.40%
Cost of debt 4.00% - 7.00% 5.50%
WACC 9.4% - 11.9% 10.6%
WACC

Cloudflare WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.24 1.28
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.60% 12.00%
Tax rate 4.10% 4.70%
Debt/Equity ratio 0.03 0.03
Cost of debt 4.00% 7.00%
After-tax WACC 9.4% 11.9%
Selected WACC 10.6%

Cloudflare's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for Cloudflare:

cost_of_equity (10.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.24) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.