Confluent Stock To $21?

Confluent (CFLT) stock has jumped 29% during the past day, and is currently trading at $29.87. Our multi-factor assessment suggests that it may be time to sell CFLT stock. We have, overall, a pessimistic view of the stock, and a price of $21 may not be out of reach. We believe there is a near-equal mix of good and bad in CFLT stock given its overall Moderate operating performance and financial condition. But keeping in mind its High valuation, we think that the stock is Unattractive.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $10 Bil in market cap, Confluent provides a managed cloud-native service and self-managed software for real-time data streaming, processing, and integration using Apache Kafka and related connectors globally.

[1] Valuation Looks High

This table highlights how CFLT is valued vs broader market. For more details see: CFLT Valuation Ratios

[2] Growth Is Very Strong

• Confluent has seen its top line grow at an average rate of 27.6% over the last 3 years
• Its revenues have grown 22% from $916 Mil to $1.1 Bil in the last 12 months
• Also, its quarterly revenues grew 19.3% to $299 Mil in the most recent quarter from $250 Mil a year ago.

This table highlights how CFLT is growing vs broader market. For more details see: CFLT Revenue Comparison

[3] Profitability Appears Very Weak

• CFLT last 12 month operating income was $-387 Mil representing operating margin of -34.7%
• With cash flow margin of 5.2%, it generated nearly $57 Mil in operating cash flow over this period
• For the same period, CFLT generated nearly $-304 Mil in net income, suggesting net margin of about -27.3%

This table highlights how CFLT profitability vs broader market. For more details see: CFLT Operating Income Comparison

[4] Financial Stability Looks Very Strong

• CFLT Debt was $1.1 Bil at the end of the most recent quarter, while its current Market Cap is $10 Bil. This implies Debt-to-Equity Ratio of 16.2%
• CFLT Cash (including cash equivalents) makes up $2.0 Bil of $2.9 Bil in total Assets. This yields a Cash-to-Assets Ratio of 69.2%

[5] Downturn Resilience Is Very Weak

CFLT has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• CFLT stock fell 82.6% from a high of $93.60 on 5 November 2021 to $16.28 on 2 November 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $37.65 on 12 February 2025 , and currently trades at $29.87

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read CFLT Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

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