Data streaming technology is the invisible force powering real-time experiences on the internet, from live inventory updates while shopping online to instantaneous sports betting odds on your smartphone. At the forefront of this industry is Confluent (NASDAQ: CFLT), whose latest financial results for the 2023 fourth quarter and full year have bolstered investor confidence. Despite a 39% increase in its stock value in 2024, the company is still trading 66% below its all-time high, presenting a compelling opportunity for investors.
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The Evolution and Importance of Data Streaming
Twenty years ago, renting a DVD from Blockbuster was the norm for movie nights, but the rise of platforms like Netflix revolutionized the industry by delivering movies directly to your TV through centralized data centers and internet streaming. Similarly, data streaming aids businesses in processing and analyzing data in real time, enabling swift adjustments for revenue maximization and cost reduction while enhancing customer experiences.
For instance, Confluent has empowered Domino’s Pizza to develop a real-time analytics platform for franchise owners and Walmart to optimize real-time inventory management across all sales channels. This transition from archaic, on-site data storage to cloud computing has solidified the role of data streaming in modern business operations.
Confluent’s Robust Fourth Quarter Performance and Growth Outlook
During the fourth quarter of 2023, Confluent exceeded expectations by achieving $213 million in revenue, marking a 26% year-over-year growth from its anticipated $205 million. Moreover, its total revenue for 2023 amounted to $777 million, reflecting a 33% increase. Remarkably, Confluent’s highest-spending customer base displayed substantial growth, with the company catering to 4,960 businesses by the end of 2023.
The net revenue retention rate of 125% underscores the company’s ability to drive increased spending from existing customers, further emphasizing the growing significance of data streaming in the corporate world. With an estimated addressable market of $60 billion in data streaming, poised to expand to $100 billion by 2025, Confluent’s growth potential remains considerable.
Positive Outlook from Wall Street Analysts
Tracking 30 analysts covering Confluent stock, the consensus appears overwhelmingly bullish, with 17 analysts recommending the highest possible buy rating. Three more analysts are in the overweight (bullish) camp, while nine recommend holding the stock. Despite the stock trading marginally below the average price target of $32.94, the recent surge in 2024 suggests a strong possibility of upward revisions to the targets in light of the company’s compelling performance.
At 66% below its all-time high, Confluent’s current valuation presents an attractive buying opportunity following a phase of substantial progress. As the company continues to capture a larger share of its expansive addressable market, long-term investors stand to reap significant rewards.
Should you invest $1,000 in Confluent right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Confluent, Domino’s Pizza, Microsoft, Netflix, and Walmart. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
