What Happened?
Shares of cloud security and performance company Cloudflare (NYSE: NET) fell 8.9% in the afternoon session after the White House announced plans to raise global tariffs to 15%.
The major stock indexes, including the S&P 500 and Nasdaq, also sank amid the uncertainty. The downturn came after President Trump announced the tariff increase in a post on Truth Social, stating the new rate would be effective immediately on countries that had been, in his words, "'ripping' the U.S. off for decades." The move sparked concern among trade partners, with Europe warning that such tariffs could put U.S. trade deals at risk. The market-wide slide reflected investor worries about the potential impact of these new global trade policies Additionally, investor concerns about disruption in the software industry from advancements in artificial intelligence (AI) continued to cause a sector-wide sell-off. The market started the week with a more cautious tone, reflecting this unease. The current wave of AI development was seen as having similar traits to previous tech cycles, marked by genuine innovation but also by exuberant expectations and sharp market reactions to new developments.
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What Is The Market Telling Us
Cloudflare’s shares are very volatile and have had 26 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 12 days ago when the stock gained 5.1% on the news that the company reported better-than-expected fourth-quarter results and issued an upbeat revenue forecast for the upcoming quarter. The company posted revenue of $614.5 million, a 33.6% increase from the prior year, surpassing analyst expectations. Adjusted earnings per share of $0.28 was in line with estimates. Billings, a measure of future revenue, were also strong at $693.3 million. Looking ahead, Cloudflare projected first-quarter revenue that was above Wall Street's forecast. However, the outlook was not entirely positive, as the company's full-year adjusted earnings per share guidance missed consensus estimates. Despite the mixed forecast, the strong revenue and billings performance, coupled with the company's key role in the expanding artificial intelligence (AI) space, fueled investor optimism.
Cloudflare is down 17.8% since the beginning of the year, and at $161.08 per share, it is trading 36.4% below its 52-week high of $253.30 from October 2025. Investors who bought $1,000 worth of Cloudflare’s shares 5 years ago would now be looking at an investment worth $2,084.
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