Why the Fastly share price fell 27% on Thursday: 60 second wrap

‘The current global environment has in some ways fueled our business, but has also created areas of uncertainty’ – Fastly CEO, Joshua Bixby.

Edge cloud platform company Fastly, Inc (NYSE: FSLY) saw its share price finish out Thursday’s session 27% lower after the company said it expected its Q3 revenues to come in lower than previously guided.

Understanding the sell-off in under 60 seconds

Here are the key things that investors and traders need to understand about Fastly’s revised guidance:

  • On Wednesday, after the market close, Fastly lowered its third quarter total revenue guidance to between $70.0m to $71.0m. Previously the company had guided for total Q3 revenues of between $73.5m to $75.5m.
  • Management cited reduced usage from its largest customer (ByteDance’s TikTok) as a key driver in this reduction in expected Q3 revenue.
  • In addition to that, management noted that during the back-half of Q3 some of the company’s other customers recorded lower usage than previously forecast.
  • Expectations around Fastly – and SAAS stocks in general – have reached fever pitch in recent times. Even after yesterday’s 27% decline, Fastly continues to trade at ~35x sales – well above the market average.

Looking forward, the company is set to report its complete third quarter earnings report on Wednesday, October 28, 2020.

Fastly last traded at $89.70 per share. YTD the stock is up 317%.

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