Cloudflare’s Traffic Overload Sparks Outage & $3B Stock Selloff!

In a dramatic turn of events, Cloudflare faced a significant but short-lived service outage this week due to an unprecedented surge in traffic. This unexpected spike overwhelmed parts of its global network, temporarily disrupting key customer workloads. Yet, what stands out is Cloudflare’s rapid containment and resolution of the incident. Within hours, the company stabilized operations, reinforced redundancies, and restored services across affected regions. Despite this commendable recovery effort and a robust financial performance year-to-date, Cloudflare’s stock has taken a noticeable hit. Shares fell over 8% in the days following the incident—raising eyebrows considering the company has posted a 30%+ year-over-year revenue growth and maintains a strong forward outlook. As analysts weigh whether the pullback is a buying opportunity or a signal of overvaluation, it’s clear that Cloudflare sits at the crossroads of innovation, execution, and scrutiny. Here are the four key drivers defining the situation.