Cloudflare (NYSE:NET) Shares Gap Down – Here’s Why

Cloudflare, Inc. (NYSE:NET)’s stock price gapped down before the market opened on Friday . The stock had previously closed at $256.79, but opened at $217.22. Cloudflare shares last traded at $201.6760, with a volume of 4,159,359 shares changing hands.

Key Stories Impacting Cloudflare

Here are the key news stories impacting Cloudflare this week:

• Positive Sentiment: Q1 results beat expectations: revenue grew ~33.5% and EPS topped estimates; management highlighted large enterprise customer additions, supporting longer-term growth potential. Cloudflare Q1 Earnings Top, Revenues Soar on Large Customer Additions
• Positive Sentiment: Management raised earnings guidance (FY26 EPS 1.190–1.200, Q2 EPS ~0.27) and some analysts kept/raised price targets (Piper Sandler to $250; BTIG reaffirmed buy), indicating continued confidence in the firm’s medium-term economics despite near-term turbulence. Piper Sandler Hikes Cloudflare Price Target to $250 Despite 15% After-Hours Drop: Buy the Dip?
• Neutral Sentiment: Management called AI the company’s “biggest tailwind,” positioning Cloudflare to capture AI-related edge and security demand — an important strategic narrative, but execution and timing are uncertain. Cloudflare stock dives on Q1 earnings, company says AI is ‘biggest tailwind’ in history
• Neutral Sentiment: Insider selling disclosed (director sale ~$558k) — a data point for some investors but not a clear directional signal on fundamentals. Insider Selling: Cloudflare (NYSE:NET) Director Sells $558,381.60 in Stock
• Negative Sentiment: Near-term revenue outlook disappointed: Q2 revenue guidance came in roughly flat to slightly below Street expectations, feeding concerns that growth will decelerate as the company invests in AI infrastructure. Cloudflare’s slowing growth disappoints investors betting on AI boost
• Negative Sentiment: Company announced an AI-driven restructuring that will cut ~1,100 jobs (~20% of staff); while framed as strategic, layoffs raise near-term execution risk and could weigh on growth expectations and investor sentiment. Cloudflare to cut 20% jobs, quarterly revenue forecast falls short
• Negative Sentiment: Market reaction: the stock sold off sharply on heavy volume after-hours and into the next session as investors punished the combination of softer near-term revenue signal and the scale/timing of restructuring. Cloudflare stock sinks 18% after earnings as company cuts 1,100 employees due to AI changes

Analysts Set New Price Targets

Several brokerages have weighed in on NET. Royal Bank Of Canada lifted their price target on shares of Cloudflare from $230.00 to $240.00 and gave the company an “outperform” rating in a report on Wednesday, February 11th. Guggenheim lifted their price target on shares of Cloudflare from $117.00 to $140.00 and gave the company a “sell” rating in a report on Wednesday, February 11th. Mizuho lowered their target price on shares of Cloudflare from $255.00 to $235.00 and set an “outperform” rating on the stock in a report on Tuesday, April 14th. Stifel Nicolaus set a $260.00 target price on shares of Cloudflare in a report on Friday. Finally, Jefferies Financial Group assumed coverage on shares of Cloudflare in a report on Wednesday, April 15th. They issued a “buy” rating on the stock. Nineteen investment analysts have rated the stock with a Buy rating, seven have assigned a Hold rating and three have given a Sell rating to the company. According to MarketBeat, Cloudflare presently has a consensus rating of “Moderate Buy” and an average target price of $233.12.

Cloudflare Trading Down 23.8%

The company has a market cap of $68.86 billion, a PE ratio of -672.99 and a beta of 1.67. The stock’s 50 day moving average is $204.88 and its 200-day moving average is $200.83. The company has a quick ratio of 1.98, a current ratio of 1.98 and a debt-to-equity ratio of 1.35.

Cloudflare (NYSE:NET) last released its quarterly earnings results on Thursday, May 7th. The company reported $0.25 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $0.23 by $0.02. The company had revenue of $639.76 million for the quarter, compared to the consensus estimate of $620.83 million. Cloudflare had a negative net margin of 4.72% and a negative return on equity of 7.24%. Cloudflare’s revenue was up 33.5% on a year-over-year basis. During the same quarter in the prior year, the firm earned $0.16 earnings per share. Cloudflare has set its FY 2026 guidance at 1.190-1.200 EPS and its Q2 2026 guidance at 0.270-0.270 EPS. As a group, sell-side analysts anticipate that Cloudflare, Inc. will post -0.11 EPS for the current year.

Insider Activity at Cloudflare

In related news, Director John Graham-Cumming sold 2,520 shares of the company’s stock in a transaction on Monday, May 4th. The shares were sold at an average price of $221.58, for a total transaction of $558,381.60. Following the sale, the director owned 494,067 shares of the company’s stock, valued at $109,475,365.86. This represents a 0.51% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Mark J. Hawkins sold 133 shares of the company’s stock in a transaction on Friday, May 1st. The shares were sold at an average price of $211.62, for a total transaction of $28,145.46. Following the sale, the director directly owned 10,189 shares in the company, valued at approximately $2,156,196.18. The trade was a 1.29% decrease in their position. The SEC filing for this sale provides additional information. Insiders have sold 638,766 shares of company stock valued at $125,757,221 over the last quarter. 10.89% of the stock is currently owned by insiders.

Institutional Inflows and Outflows

Hedge funds have recently bought and sold shares of the company. Physician Wealth Advisors Inc. increased its position in Cloudflare by 693.3% during the third quarter. Physician Wealth Advisors Inc. now owns 119 shares of the company’s stock valued at $26,000 after acquiring an additional 104 shares during the last quarter. Wiser Advisor Group LLC bought a new position in Cloudflare during the third quarter valued at $26,000. HM Payson & Co. bought a new position in Cloudflare during the fourth quarter valued at $25,000. Westside Investment Management Inc. increased its position in Cloudflare by 100.0% during the third quarter. Westside Investment Management Inc. now owns 130 shares of the company’s stock valued at $28,000 after acquiring an additional 65 shares during the last quarter. Finally, ORG Wealth Partners LLC increased its position in Cloudflare by 101.4% during the third quarter. ORG Wealth Partners LLC now owns 139 shares of the company’s stock valued at $30,000 after acquiring an additional 70 shares during the last quarter. Institutional investors own 82.68% of the company’s stock.

Cloudflare Company Profile

Cloudflare, Inc is a global web infrastructure and security company that provides a suite of services designed to improve the performance, reliability and security of internet properties. Its core offerings include a content delivery network (CDN), distributed denial-of-service (DDoS) protection, managed DNS, and a web application firewall (WAF). Cloudflare also provides tools for bot management, SSL/TLS, load balancing and rate limiting to help organizations maintain uptime and protect web applications from attack.

In addition to traditional edge and security services, Cloudflare has expanded into edge computing and developer platforms.