The issue was mostly resolved shortly after the stock markets opened, but some issues remain.
Many people woke up Tuesday to widespread Internet outages due to technical issues at Cloudflare (NYSE:NET).
Cloudlflare is a content delivery network that is a middleman between websites and servers, working to improve service, security, and reliability.
But on Tuesday, the Cloudflare was experiencing technical issues, which caused widespread outages. According to Down Detector, there were thousands of complaints about website outages as of Tuesday morning at 9:00 am ET for many popular websites and platforms including X, ChatGPT, Spotify, Bet365, Truth Social, and other websites, apps, and platforms that use Cloudflare’s services.
Cloudflare works with a lot of corporate clients to protect and secure their internal networks and content management systems, so many of those were down as well.
Issue mostly resolved, stock bounces back
At around 9:45 a.m. ET, Cloudflare posted that the issue had been resolved.
A fix has been implemented and we believe the incident is now resolved. We are continuing to monitor for errors to ensure all services are back to normal,” the update read.
Cloudflare stock was down about 7% when trading opened Tuesday morning, with the outage ongoing. But it had come off of its lows and by 10:45 a.m. ET it was only down about 3%.
However, it seems that some problems persisted post-fix, as Cloudflare provided an update at 10:40 a.m. ET.
“The team is continuing to focus on restoring service post-fix. We are mitigating several issues that remain post-deployment.”
The problems started around 6:48 a.m. ET Tuesday when Cloudflare officials posted an update that said: “Cloudflare is experiencing an internal service degradation. Some services may be intermittently impacted. We are focused on restoring service. We will update as we are able to remediate. More updates to follow shortly.”
At around 8:00 a.m. ET, Cloudflare officials said the “issue has been identified and a fix is being implemented.”
What’s next?
Cloudflare stock was among the most heavily shorted by institutional investors in October, according to the latest Hazeltree Shortside Crowdedness Report.
Cloudflare stock is up about 75% YTD and it has a median price target among analysts of $260 per share. That would be some 26% higher than the current share price.
However, it remains to be seen what the financial impact is from this outage, if any. In general, aside from the temporary hit to the stock price, these types of issues can lead to reputational damage, legal issues, costs to fix the issues, and potential penalties depending on contracts.
That is not to say that Cloudflare will be impacted by these factors — it is still too early to know what the impact will be beyond the kneejerk stock price reaction. But investors should watch things closely for any additional fallout, if there is any.
One concern outside of this is the company has not yet been profitable and it has an extremely high forward P/E of 161 based on expected earnings.
