What Happened?
Shares of internet security and content delivery network Cloudflare (NYSE: NET) jumped 7% in the afternoon session after the major indices popped (Nasdaq +3.4%, S&P 500 +2.5%) in response to the positive outcome of U.S.-China trade negotiations, as both sides agreed to pause some tariffs for 90 days, signaling a potential turning point in ongoing tensions. This rollback cuts U.S. tariffs on Chinese goods to 30% and Chinese tariffs on U.S. imports to 10%, giving companies breathing room to reset inventories and supply chains.
However, President Trump clarified that tariffs could go "substantially higher" if a full deal with China wasn't reached during the 90-day pause, but not all the way back to the previous levels.
Still, the agreement has cooled fears of a prolonged trade war, helping stabilize expectations for global growth and trade flows and fueling renewed optimism.
The optimism appeared concentrated in key trade-sensitive sectors, particularly technology, retail, and industrials, as lower tariffs reduce cost pressures and restore cross-border demand.
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What The Market Is Telling Us
Cloudflare’s shares are very volatile and have had 24 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 3 days ago when the stock gained 6.8% on the news that the company reported impressive first quarter 2025 results with key top line metrics including sales and billings exceeding Wall Street's expectations. The quarter featured a record-breaking deal driven by its Workers developer platform, signaling that Cloudflare's push into programmable cloud services is gaining serious traction.
Also worth highlighting was how much new business was pulled in, as Cloudflare recorded the strongest gain in new long-term contracts they've had in three years.
On the other hand, its EPS guidance for next quarter missed, although full-year EPS guidance was maintained. Overall, it was a strong quarter given the solid top line growth and growing adoption of its platform.
Cloudflare is up 26.9% since the beginning of the year, but at $142.93 per share, it is still trading 19% below its 52-week high of $176.50 from February 2025. Investors who bought $1,000 worth of Cloudflare’s shares 5 years ago would now be looking at an investment worth $4,960.
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