As a content delivery network (CDN) and cybersecurity specialist, Cloudflare (NYSE:NET) stock was always going to be a relevant play on paper.

But when the novel coronavirus rudely made its appearance, suddenly, NET stock took on far greater importance. This particular sentiment has only grown stronger, which puts investors into a classic quandary: buy now or wait out the speculative storm?

Due to the far-reaching implications of the Covid-19 crisis, it’s easy to understand why many bold investors poured their funds into NET stock. As the global health crisis forced worker bees out of their corporate hives and into their individual nests, demand for data spread out from high-capacity focal points to living rooms across the country.

Thanks to the nature of CDNs, which basically bring data closer to the source of demand, NET stock flourished. Further, CDNs weren’t just useful for professional pursuits. Indeed, with people forced to turn to at-home entertainment due to the loss of other in-person options, companies like Netflix (NASDAQ:NFLX) experienced unprecedented demand spikes.

Thus, more and more people paid attention to CDNs and their importance to the functioning of the internet, much like people currently are receiving an education on supply chain disruptions. Further, with so many people reliant on connectivity technologies, Cloudflare’s cybersecurity solutions – particularly for its distributed denial of service (DDoS) mitigations – saw increased interest.

But with societies gradually returning to normal, is there a longer-term justification for NET stock, especially at its meteoric price? As our own Dana Blankenhorn explained, Cloudflare’s real valuation is tied to its Web 3.0 protocol.

“This means content doesn’t have to sit in an Amazon (NASDAQ:AMZN) Web server, paying a fat toll to be exported. It can live anywhere. Amazon calls its storage service S3. Cloudflare calls its service R2, and it’s disrupting the disrupter.”

Is Internet’s Next Generation the Key to NET Stock?

My InvestorPlace colleague further stated that “Cloudflare gives customers pricing power against the clouds’ biggest-margin business. It also gives the edge of the network the power of the core.” Essentially, the big boys can’t ruthlessly monopolize the vital CDN industry. By decentralizing power away from centralized sources, the company undergirding NET stock can do itself and everyone else much good.

If that didn’t excite you about Cloudflare’s prospects, Blankenhorn explained as such. “The latest move higher in Cloudflare came at the same time Tesla (NASDAQ:TSLA) soared to a $1 trillion market cap and it’s ever so loosely related. Just as Tesla disrupted the auto market, Cloudflare is disrupting the cloud with R2.”

Sounds like a compelling narrative to me? But as Blankenhorn himself acknowledged, it’s an open question whether NET stock is worth 100x sales.

To answer that question, you’ve got to individually assess whether Cloudflare’s association to Web 3.0 will be relevant enough. By the nature of the business, it’s possible that the disrupter of the disrupter could itself be disrupted. Thanks to the evolution of technology, no one can truly be considered an apex predator.

Setting that aside, investors may have to ask a bigger question: will Web 3.0 materialize the way we imagine? Right now, the concept of decentralized frictionless protocols – what Blankenhorn refers to as a cloudless cloud – is appealing because of cryptocurrencies. However, decentralization creates its own problems, as I’ve argued in the past.

As a transactional network, decentralized protocols are far cheaper than centralized wire transfers. But one of the risks is that you lose the security of centralized mechanisms: you don’t have anyone to complain to if stuff goes wrong.

So it is with decentralized web applications. Without gatekeepers, content users might not have adequate recourse if something goes awry, which it invariably does.

The Discount Possibility

If you’re like me, you loathe buying shares into strength. With NET stock up over 45% in the trailing month, it’s tough to justify taking a shot here. But then, my colleague asks a probing question: what if the dip never arrives?

That of course is your million-dollar question. If you believe in the strengths of its current business applications and the future of Web 3.0 (and how Cloudflare will be a driving influence), then 100-times sales for NET stock could be cheap. If the company slips up, though, you could be buying a big mistake.

Personally – and this is just me thinking aloud – the amount of sustained speculation makes me leery. If the music ever stops (or just dims a little), you’d imagine that overpriced assets like NET stock will incur a sizable correction.

But the music hasn’t stopped, triggering a this-time-it’s-different scenario. Honestly, this is going to come down to how confident you are in Cloudflare’s long-term trajectory.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.