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The past few hours have been a lesson in contrasts for Wall Street watchers. 

Reports emerged this morning that The We Co., parent of unprofitable co-working provider WeWork, will slash its valuation from $47 billion to as little as $10 billion ahead of its initial public offering. Also this morning, Cloudflare Inc., another unprofitable tech firm, saw its share price soar as much as 27% following a successful IPO that raked in $525 million.

Cloudflare sold 35 million shares for $15 apiece on Thursday after originally setting a $12 to $14 target. At the IPO price, the company was worth $4.4 billion. Its stock has since climbed past the $18 mark. Update: By the end of Friday’s trading, the stock had risen 20%, to $18.

San Francisco-based Cloudflare operates a content delivery network that helps website operators load pages faster for users. The network also acts as a shield against hackers, absorbing distributed denial-of-service attacks that seek to knock sites  offline by overwhelming them with bogus traffic.

Cloudflare has grown beyond just another content delivery and security provider into a key part of the internet. The company’s platform supports roughly 10% of the world’s top million sites and more than 20 million internet properties overall, handling trillions of requests every month. Most of Cloudflare’s users rely on its free service tier but the company has a growing paying customer base that includes about a tenth of the Fortune 1000.

Cloudflare recorded a $36.8 million loss on $129.2 million in revenue for the first half of 2019. As a percentage of sales, Cloudflare’s losses dropped to 28.5% in that period from 37.3% a year ago. The $129.3 million in revenue the company generated, meanwhile, amounted to a 48% increase over the first half of 2018.

The fact that Cloudflare is getting closer to achieving profitability was no doubt a key factor in why it managed to win Wall Street’s favor. WeWork, by contrast, has been criticized for failing to demonstrate clearly how it can climb out of the red.

Cloudflare co-founders Matthew Prince and Michelle Zatlyn (pictured) penned a blog post today in which they laid out their strategy going forward. “We will continue to invest in R&D so long as it demonstrates a significant return. Our investment philosophy is oriented around making many small, inexpensive bets — quickly killing the ones that don’t work, and increasing investment in the ones that do,” they wrote.

But though Prince and Zatlyn gave a nod to the merits of avoiding the kind of aggressive spending that has undermined WeWork’s IPO plans, turning a profit won’t necessarily be Cloudflare’s first priority as a publicly traded firm. The company warned in its prospectus for the listing that “we may continue to operate at a loss or our profitability may be lower than it would be if our strategy were to maximize short-term profitability.”

Cloudflare is trading on the New York Stock Exchange under the ticker symbol “NET.”

Photo: NYSE/Twitter