The stock is now trading at a more expensive valuation of 23 times trailing sales. To justify the valuation, Cloudflare may need to show even better revenue growth in 2025. While there are catalysts that could make that happen, there are also headwinds that could limit the stock's performance.

The stock of Cloudflare (NYSE: NET) is making gains in Thursday trading. The software specialist's share price was up 4.5% as of 10:15 a.m. ET today. Meanwhile, the S&P 500 index and the Nasdaq Composite index were both down 0.

Cloudflare’s stock price is at an important resistance level as the market assesses whether it has more upside after soaring 41% in 2024. It was trading at $112.55, a few points below the key resistance level of $116.