Shares of edge network software company Cloudflare (NET -1.58%) are down nearly 14% this week. There wasn't any bad news. The slide is likely just an overdue cooling-off. Shares are up nearly 180% over the last trailing 12-month period.
But scapegoats for the decline in the final days of September abound anyway. The 10-year treasury interest rate rose to over 1.5% this week (higher interest rates lowers the value of future earnings, which tends to hit high-growth names like Cloudflare) and ongoing political turmoil in Washington D.C. and a possible default on government debt, if Congress doesn't act, were the likely catalysts for Cloudflare hitting the skids.
As for company-specific news, Cloudflare actually had a busy week. It announced two new products: Advanced Email Security Suite that gives businesses more control over security and anti-tampering features; and R2 Storage, which gives developers a fresh option for storing data other than at cloud computing giant Amazon (AMZN -1.40%) Web Services (which, incidentally, is the service Cloudflare CEO Matthew Prince called out as the high-fee sector leader to disrupt when R2 Storage was announced).
Cloudflare's expanding ecosystem of security and developer products at the network edge has been riding impressive momentum. It's continued to grow at a more than 50% clip this year, even as other tech firms have slowed in their growth trajectory following booming sales in 2020. Its extensive services put it into increasing competition with the biggest cloud service providers, but that hasn't slowed Cloudflare down any.
Even factoring for the recent pullback, Cloudflare stock trades for a whopping 65 times trailing 12-month sales. After its epic run, expect further volatility ahead, but Cloudflare nonetheless has a bright future.