Cloudflare, Inc. (NET) Down 4.9% — Should I Pull Back Now?
Cloudflare, Inc. (NET) is ceding ground on Thursday, last changing hands at $308.37 on the NYSE, down $15.96 from the prior close of $324.33. The decline extends a sharp reversal from the stock's 52-week high of $370.35, set on October 6, 2026, just nine days ago. NET now trades about 16.7% below that peak. It remains roughly 94% above its 52-week low of $158.83, so the stock has still nearly doubled over the past year despite giving back a meaningful slice of those gains in little more than a week.
Volume stands at approximately 2.49 million shares with the session still underway, compared with a 90-day average of about 3.32 million. Turnover so far is running at roughly three-quarters of a typical full day.
Why Cloudflare, Inc. Price is Moving Lower
The most plausible driver of Thursday's drop is a broad selloff in high-priced technology and AI-related stocks, sharpened by a hotter-than-expected inflation print. September wholesale prices rose 1.3% month over month against the 0.6% expected and climbed 6.3% year over year against a 5.5% forecast. That kind of upside surprise threatens the rate outlook that supports richly valued growth names. By midday, the Nasdaq was down 0.4% and the S&P information-technology sector had fallen 1.1%. Cybersecurity stocks were hit especially hard. CrowdStrike (CRWD) slid 3.16%, Fortinet (FTNT) lost 2.91%, Palo Alto Networks (PANW) was off 2.76%, and Zscaler (ZS) shed 1.50%. Snowflake Inc. (SNOW), another consumption-driven, high-multiple software name, slipped 1.35%. Investors are also openly questioning whether the heavy spending and borrowing tied to AI infrastructure will produce adequate returns, a debate that weighs directly on a company marketing Workers AI and AI Gateway as growth engines.
NET's steeper decline than most of its cybersecurity peers fits the profile of the selloff. A stock carrying a $115.49 billion market cap against negative earnings, which had just run to a record $370.35 on October 6, has less valuation cushion when inflation data turns against growth multiples. Some of today's selling is likely profit-taking on that recent run.
The pressure is not rooted in deteriorating results. Cloudflare's most recent report, released on August 6, showed second-quarter adjusted EPS of $0.29 against a $0.2684 estimate and revenue of $696.06 million against the $664.67 million consensus, a 35.9% year-over-year increase. Management guided Q3 revenue to $736 million to $737 million, roughly 31% growth, and raised its full-year 2026 revenue outlook to $2.864 billion to $2.870 billion. That guidance implies some deceleration from the second quarter's pace, and the company will be tested on it when it reports Q3 results on November 5 after the market closes.
What is the Cloudflare, Inc. Rating - Should I Sell?
Weiss Ratings assigns NET a D- rating. The rating was upgraded on 3/4/2025. Current recommendation is Sell. Even after that upgrade, the rating sits near the bottom of the Sell range. The stock's impressive price performance has not been matched by the profitability needed to justify a $115.49 billion valuation.
The strongest parts of Cloudflare's profile are its balance sheet and its returns to shareholders. The Excellent rating on the Solvency Index indicates the company can keep funding expansion of its global network and AI inference capacity without leaning on outside capital under strain. That matters at a time when the market is scrutinizing how AI buildouts are being financed. The Excellent Total Return Index reflects a stock that climbed from $158.83 to $370.35 over the past 52 weeks. Even after today's pullback, holders who bought a year ago are sitting on substantial gains.
The picture weakens considerably on the operating side. The Very Weak rating on the Efficiency Index points to a business that still loses money at scale. Cloudflare posts a -8.21% profit margin despite crossing the $2.8 billion annual revenue run rate, and its forward P/E of -556.50 signals that analysts are not yet projecting a sustained shift into GAAP profitability. The Weak rating on the Growth Index may seem surprising next to 35.87% revenue growth and an 8.8% sequential increase from $639.76 million in the first quarter to $696.06 million in the second. On the bottom line, however, EPS remains at -$0.58, and the top-line expansion has not yet translated into earnings. The Volatility Index is rated Fair, and today's 4.92% slide on an inflation-driven tech selloff, following a near-doubling over the past year, illustrates why it is not rated higher.
Within the Information Technology sector, Cloudflare trails Adobe Inc. (ADBE, D+), Intuit Inc. (INTU, D+), and Strategy Inc (MSTR, D). It ranks ahead of Snowflake Inc. (SNOW, E+) and Atlassian Corporation (TEAM, E+). Cloudflare's peer group is heavily weighted toward Sell-rated names, a reminder that strong revenue growth across much of high-multiple software has not been enough to offset weak profitability in Weiss's framework.
About Cloudflare, Inc.
Cloudflare, Inc. (NET) is an Information Technology company behind a global cloud platform that delivers security, performance, and networking services to businesses of every size. Founded in 2009 and headquartered in San Francisco, California, the company built its reputation on application security and performance. Its offerings include web application firewall protection, bot management, distributed denial of service mitigation, API security, and SSL/TLS encryption, alongside content delivery, load balancing, DNS, video stream delivery, and its Waiting Room and Data Localization Suite products.
Over time, Cloudflare has expanded into enterprise networking and Zero Trust security. Its SASE platform combines network services such as Magic WAN, Magic Transit, Magic Firewall, Cloudflare Network Interconnect, and Spectrum with Zero Trust network access, secure web gateway, remote browser isolation, cloud access security broker, cloud email security, digital experience monitoring, and data loss prevention. This positions the company to replace legacy hardware appliances with a single cloud-delivered security and connectivity layer covering public and private clouds, on-premises infrastructure, SaaS applications, and IoT devices.
The developer platform is a newer growth avenue. Cloudflare Workers, Pages, R2 object storage, Workers KV, Durable Objects, D1, Hyperdrive, and Queues let developers build and run applications directly on Cloudflare's edge network. Workers AI, Vectorize, and AI Gateway extend that reach into AI inference and model management. The company also serves consumers through its 1.1.1.1 DNS resolver with WARP and its domain registrar. Its customers span technology, healthcare, financial services, consumer and retail, industrial, non-profit, and government sectors. The scale and reach of its global network form a competitive advantage that is difficult and costly for rivals to replicate.
Investor Outlook
Cloudflare, Inc. (NET) carries a Weiss Rating of D- (Sell). Today's decline shows how exposed a loss-making, high-multiple stock remains to inflation surprises and doubts about AI spending, even when its business results are strong. Investors should watch the November 5 Q3 report for delivery against the $736 million to $737 million revenue guidance and any measurable progress on margins, as well as upcoming inflation data that could keep pressure on growth valuations. See full rankings of all D- rated Information Technology stocks inside the Weiss Stock Screener.
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