SCHEDULE: Morgan Stanley Amends Cloudflare Stake, Subsidiary Drops Below 5%

Morgan Stanley and its subsidiary, Morgan Stanley Investment Management Inc., filed an amended Schedule 13G disclosing their beneficial ownership in Cloudflare, Inc., with the subsidiary's stake falling below 5%.

Summary

• Morgan Stanley and its subsidiary, Morgan Stanley Investment Management Inc., filed an Amendment No. 6 to Schedule 13G regarding their beneficial ownership of Cloudflare, Inc. Class A Common Stock.
• As of December 31, 2025, Morgan Stanley beneficially owns an aggregate of 16,803,415 shares, representing 5.3% of Cloudflare's Class A Common Stock.
• Morgan Stanley holds shared voting power over 14,874,525 shares and shared dispositive power over 16,803,415 shares.
• Morgan Stanley Investment Management Inc. beneficially owns an aggregate of 15,737,757 shares, representing 4.9% of Cloudflare's Class A Common Stock.
• Morgan Stanley Investment Management Inc. holds shared voting power over 13,961,687 shares and shared dispositive power over 15,737,757 shares.
• Morgan Stanley Investment Management Inc. has ceased to be the beneficial owner of more than five percent of Cloudflare's Class A Common Stock.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral to slightly negative development. While Morgan Stanley as a whole retains a significant stake, the subsidiary's reduction below the 5% threshold indicates a decrease in its direct beneficial ownership, which could be perceived as a minor loss of conviction.

Positives

• Morgan Stanley, as a parent holding company, maintains a significant beneficial ownership stake of 5.3% in Cloudflare, Inc., indicating continued institutional interest.

Negatives

• Morgan Stanley Investment Management Inc., a subsidiary, has reduced its beneficial ownership in Cloudflare, Inc. to 4.9%, falling below the 5% threshold.

Risks

• A decrease in a major institutional investor's stake below the 5% reporting threshold could signal a shift in investment strategy or a less favorable outlook on the issuer, potentially impacting market perception.

Future Outlook

This filing does not contain forward-looking statements or guidance from the issuer.

Industry Context

StockSavvy.ai notes that institutional ownership changes, particularly from major financial entities like Morgan Stanley, are closely watched by the market. While the parent entity maintains a 5.3% stake, the subsidiary's reduction below 5% could be interpreted as a minor rebalancing of portfolio allocations or a slight adjustment in investment conviction regarding Cloudflare within the broader technology and cybersecurity sectors.

Comparison to Industry Standards

• Institutional ownership of publicly traded companies is common, with large asset managers and investment banks frequently holding significant stakes.
• Morgan Stanley's 5.3% stake in Cloudflare is a notable position, though the subsidiary's reduction below 5% suggests a more active management decision compared to purely passive index tracking.
• This is a common occurrence in actively managed funds, unlike the typically larger, more stable holdings seen in broad market ETFs from firms like iShares or SPDR.

Stakeholder Impact

• Shareholders: The reduction in beneficial ownership by Morgan Stanley Investment Management Inc. might lead to minor concerns about institutional confidence, potentially influencing short-term trading sentiment. However, the overall stake held by Morgan Stanley remains significant.

Key Dates

Recommendation

The filing indicates a minor adjustment in institutional ownership rather than a fundamental shift in the company's prospects. While Morgan Stanley Investment Management Inc. reduced its stake below 5%, the parent company, Morgan Stanley, still holds a substantial 5.3% beneficial ownership. This suggests continued institutional interest but also a potential rebalancing. Without additional information on Cloudflare's performance or strategic direction, a "hold" recommendation is appropriate, advising investors to monitor future developments and broader market trends.

Keywords

Cloudflare, Inc., Morgan Stanley, Morgan Stanley Investment Management, Schedule 13G, beneficial ownership, Class A Common Stock, institutional investment, equity stake, SEC filing