Key Points
Cloudflare jumped 9.9% to $268.62 on Friday after third-quarter revenue grew 39% to $782.5 million, its fastest growth in nearly four years and well above the roughly $738.5 million analysts expected.
Cloudflare raised its full-year revenue forecast for the third time this year, to $2.963 billion to $2.964 billion, up from $2.864 billion to $2.870 billion in August.
DraftKings plunged 21.3% to $18.51 after cutting its 2026 adjusted EBITDA forecast to $175 million to $275 million, from $700 million to $900 million.
The U.S. added 165,000 jobs in October and the unemployment rate dipped to 4.1%, better than the 4.2% economists forecast.
On Friday the Nasdaq rose 1.1%, the S&P 500 rose 0.3% and the Dow fell 0.5% at 4:01 p.m., leaving the Nasdaq down 3.4% and the S&P 500 down 2.7% for the week.
On Thursday, Cloudflare got sold with everything else.
The stock fell about 8% as the post-election panic tore through anything connected to artificial intelligence. Investors didn't wait to see the numbers. They just hit the sell button.
Then the numbers came out after the bell, and Cloudflare's CEO opened the call with a sentence most executives never get to say: "By nearly every metric, we had our best quarter ever."
On Friday, the stock jumped 9.9%.
Across the tape, DraftKings went the other way. The difference between them says a lot about what investors are willing to pay for right now.
The Best Quarter Ever, Reported on the Worst Day
Cloudflare runs one of the largest networks on the internet. It speeds up websites, blocks cyberattacks and, increasingly, lets developers run AI software at the edge of its network, close to users.
Third-quarter revenue rose 39% to $782.5 million. That beat the roughly $738.5 million Wall Street expected and came in about 6% above the top of the company's own guidance, according to drillr's review of the results.
The details were just as strong:
Cloudflare added a record 308 large customers, those paying more than $100,000 a year, bringing the total to about 5,000. Those customers now generate 75% of revenue, up from 73% a year earlier.
Current remaining performance obligations, contracted revenue due over the next year, grew 37%.
Non-GAAP operating income was $137.1 million, even as the company still posted a GAAP operating loss of $67.9 million.
Then came the guidance. Cloudflare now expects full-year revenue of $2.963 billion to $2.964 billion, up from the $2.864 billion to $2.870 billion it forecast in August. It expects fourth-quarter revenue of $845 million to $846 million and raised its full-year adjusted earnings forecast to $1.35 a share, from $1.25 to $1.26. Bloomberg noted it was the company's third profit forecast increase of the year.
Cloudflare closed Friday at $268.62. It had been trading more than 17% higher in the morning before giving back part of the gain.
DraftKings Spent Its Way Into a Crash
DraftKings didn't miss by a little.
Third-quarter revenue rose 16% to $1.329 billion, short of the roughly $1.398 billion analysts expected, according to Benzinga Pro. The adjusted loss came to 53 cents a share, wider than the 39 cents Wall Street had penciled in. One Stifel analyst called it "a shocking quarter."
The bigger problem was the forecast. DraftKings now expects 2026 adjusted EBITDA of just $175 million to $275 million, down from $700 million to $900 million. It also trimmed its revenue outlook to $6.35 billion to $6.55 billion, from $6.5 billion to $6.9 billion.
Most of the cut comes from one place: prediction markets. DraftKings now plans to pour $650 million to $700 million into its new Predictions business this year, up from $200 million to $300 million, and says that business will bring in essentially no revenue in 2026. Its core sports betting and casino business is still expected to earn $875 million to $925 million in adjusted EBITDA.
In other words, the old business is fine. Investors just don't want to pay for the new one. DraftKings closed at $18.51.
The Market Bounced, but Picked Its Spots
Friday's broader rebound came with a strong jobs report behind it. The U.S. economy added 165,000 jobs in October, and the unemployment rate slipped to 4.1% from 4.2%, according to the Bureau of Labor Statistics. Reuters said the data gives the Federal Reserve more room to focus on inflation. That matters, because heading into the week, the October jobs report was expected to all but settle whether the Fed hikes on December 9.
Chipmakers bounced after Thursday's wreckage. Nvidia rose 2.8%, AMD jumped 11.0% and Micron jumped 5.1%, recovering only part of the 9.3%, 17.3% and 17.5% losses they took on Thursday, the day the Nasdaq crashed 5.5% and AppLovin jumped 31%.
Airbnb was another earnings winner. It jumped 11.7% to $189.99 after third-quarter revenue rose 19% to $4.87 billion, earnings jumped 43% to $3.16 a share, and the board authorized a new $12 billion buyback.
At 4:01 p.m., the Nasdaq was up 1.1% at 24,579.42, the S&P 500 was up 0.3% at 7,376.87 and the Dow was down 0.5% at 51,285.73. For the week, the Nasdaq finished down 3.4%, the S&P 500 down 2.7% and the Dow down 0.9%.
The pattern is hard to miss. Companies that showed real revenue and real cash got rewarded. Companies asking investors to fund an expensive new bet got punished, no matter how good the old business looks.
What Lands Next
Next week starts fast. Constellation Energy, NRG, Occidental Petroleum and KKR are all scheduled to report before Monday's open, and Take-Two Interactive reports Monday after the close, ten days before Grand Theft Auto VI launches.
On Tuesday at 8:30 a.m. ET, the October consumer price index arrives. It is the last CPI report the Fed will see before its December 9 decision. Cisco reports Thursday after the close.
After a week in which the Nasdaq slid into a correction, the question is simple: was Friday the start of a recovery, or just a breather? Cloudflare's quarter suggests the market will keep paying up for results. DraftKings shows what happens to everyone else.
This article is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.
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