Cloudflare Stock (NET) Cracks as Outage Cripples X, LinkedIn, Zoom, Others
Cloudflare experienced another outage, affecting sites like X, LinkedIn, and Zoom, causing NET stock to drop over 2%. The issue was due to a cross-regional internet problem from a third-party provider, now resolved. Analysts highlight risks of dependency on few infrastructure providers. Despite outages, Cloudflare's stock is rated a Moderate Buy with a 22% upside potential.
Just over two weeks after a major outage, another downtime from web infrastructure and cybersecurity firm Cloudflare (NET) on Friday locked users out of several sites, including X, Microsoft's (MSTF) LinkedIn, Zoom, and Coinbase (COIN). NET stock fell over 2% early Friday following the incident.
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Cloudflare Says 'Internet Issue' Behind Latest Outage
In a status update on its website, Cloudflare identified the root cause of the latest downtime to be "a cross-regional internet issue" emerging from a third-party cloud service provider. The California-based company said it has fixed the issue for clients relying on its U.S. and Australia-based servers, and regular access ought to have been restored for those clients.
"We continue to monitor and work on restoring connectivity for accounts in our EU server," Cloudflare added.
In the latest update, Cloudflare said it has restored access to its platform across all servers, adding that "the platform is now back to regular service."
Why Did Cloudflare Service Crash in November?
The recent service breakdown in mid-November also affected several sites, including X and OpenAI's (PC:OPAIQ) ChatGPT chatbot. However, the chatbot is up and running this time around.
Dane Knecht, Cloudflare's chief technology officer, said the previous outage stemmed from a "latent bug" that was triggered after the cybersecurity firm implemented a routine configuration change. The flaw affected a core service underpinning Cloudflare's bot mitigation system, causing it to crash.
Analyst Says Outages Show Risk of Concentrated Dependency
BofA analyst Tomer Zilberman has previously noted that the recent outage at Cloudflare, alongside recent ones at Amazon Web Services (AMZN) and Microsoft's Azure cloud service, is a reminder of the risk of businesses depending on only a few major infrastructure providers. At the time, Zilberman predicted only "limited" long-term impact from the outage on Cloudflare's business.
Is NET a Good Stock to Buy?
On Wall Street, Cloudflare's shares remain a Moderate Buy based on the consensus rating of 26 analysts. This breaks down to 15 Buys and 11 Holds issued over the past three months.
At $248.78, the average NET price target implies approximately 22% upside from the current trading levels.
