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Cloudflare, Inc. shares moved sharply lower in premarket trading on Tuesday after a major outage disrupted some of the world’s most widely used internet platforms. According to multiple reports, apps including X, ChatGPT, PayPal, and Uber experienced widespread 500 errors tied to Cloudflare’s infrastructure.

The outage, which the company attributed to an unusual spike in traffic, drew immediate market reaction and raised questions about service reliability.

Cloudflare Outage Sends Shockwaves Through Global Services

Cloudflare said it was aware of issues affecting multiple customers, citing failures across its dashboard, API, and core network pathways. The company confirmed that it saw an “unusual spike in traffic” around 11:20 UTC, causing elevated error rates across several of its services. While some systems began recovering, Cloudflare warned that elevated error levels might persist as remediation efforts continued.

The outage had a cascading impact on global internet usage. Users trying to access services like ChatGPT, X, and other high-traffic platforms were greeted with “internal server error” messages tied directly to Cloudflare’s network. Several major apps also reported intermittent downtime, highlighting the widespread reliance on Cloudflare’s infrastructure. With no confirmed root cause beyond the traffic anomaly, the incident underscored the fragility of critical internet routing systems.

Shares Fall Nearly 4% as Outage Raises Reliability Concerns

Cloudflare (NET) shares fell 3.9% in premarket trading following news of the outage, dropping to about $193.15 as of 8:44 AM EST. This followed a 4% decline the previous trading day as the stock closed at $202.25. The move pushed NET further below key technical levels, continuing a pullback from its record high of $260 reached earlier in the month.

Despite the selloff, Cloudflare remains one of the stronger performers in 2025, with shares still up more than 80% year-to-date. The company recently posted solid quarterly results, reporting 31% year-over-year revenue growth to $562 million and earnings of $0.27 per share. Even so, with rising volatility across AI and infrastructure names, and fresh concerns tied to outages, investor sentiment remains cautious in the near term.

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