Cloudflare (NET) stock has dropped by 20.2% in under a month, from $253.30 on 31st Oct, 2025 to $202.25 currently. What lies ahead?
Cloudflare (NYSE:NET) shares moved lower in early trade on Tuesday after the web application security and performance firm was hit by an outage that downed major websites, including social media app X, eCommerce platform Shopify and OpenAI's AI chatbot ChatGPT. A Cloudflare spokesperson said the company saw a “spike in unusual traffic” to one of its services at 6.20 am Eastern Time on Tuesday, which caused some of Cloudflare's global network services to experience errors, including widespread HTTP 500 errors.
The company's web security tools are invisible to users, but underpin many widely trafficked sites.
The cloud-service provider reported widespread outages, which affected sites including X and ChatGPT.
Cloudflare was hit by an outage that knocked several major websites and services offline for global users. OpenAI's ChatGPT and Elon Musk's social media platform X appear to have been affected by the Cloudflare issues.
As services like X and ChatGPT experience disruptions, attention turns to Cloudflare, the $70 billion company that helps route network traffic behind the scenes.
Social media platform X was down for thousands of users in the US, according to Downdetector.
Recently, Zacks.com users have been paying close attention to Cloudflare (NET). This makes it worthwhile to examine what the stock has in store.
Cloudflare delivered strong Q3 FY25 results, with accelerated revenue growth, robust $100K+ customer momentum, and raised full-year guidance. Despite operational excellence, Cloudflare's high valuation has led it to underperform against other high-growth cybersecurity names, like CrowdStrike and Zscaler, over a 3M period. The departure of a key executive and a substantially higher price-to-sales ratio compared to peers add uncertainty and potential volatility to Cloudflare's forward execution.
Cloudflare has delivered accelerating revenue growth above 30% year-over-year, defying a weak macro environment and benefiting from AI-driven demand. NET's large public sector wins, including a $20 million federal contract and FedRAMP certification, highlight strong momentum in government business. Despite robust growth and Rule of 40 status, NET's slowing margin expansion and fierce competition from AWS and Fastly present notable risks.
The Zacks Internet software industry participants like PLTR, NET and RDDT are benefiting from high demand for SaaS due to the increasing need for hybrid work, learning and diagnosis software, as well as cybersecurity applications.
Cloudflare (NET) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.