Fastly downgraded by analysts following global outage
Although Fastly was able to resolve its technical issues quickly, analysts fear the outage would put added pressure on its ‘already challenging’ 2021 revenue guidance.
- Fastly Inc (NYSE: FSLY) share price is down 4.6% two days after its network went dark
- Although shares remarkably opened higher immediately after the breakdown, they have since fallen 12% since Wednesday afternoon (09 June 2021)
- The global outage saw a whole host of popular news and e-commerce websites go offline for nearly an hour
- The issue was quickly fixed, but analysts fear this will cause customers to switch to other content delivery networks and impact new sales
- Buy and sell Fastly Inc shares with an IG account
Fastly stock price: What’s the update?
Fastly shares have slumped 12% since Wednesday, a day after its network suffered an outage that took down a host of popular news, e-commerce and government websites.
The content delivery network (CDN), which helps websites to load their pages faster, experienced disruption for an hour on Tuesday. News websites including BBC, CNN, the New York Times and Bloomberg, as well as e-commerce services like Amazon and Shopify went offline during that period as a result.
Remarkably, Fastly’s share price actually opened higher immediately following the shutdown.
Fastly said after the incident that a valid configuration change by a customer had triggered an undiscovered software bug. The company was able to fix the issue 49 minutes after discovering the problem.
‘This outage was broad and severe, and we’re truly sorry for the impact to our customers and everyone who relies on them,’ Nick Rockwell, Fastly’s senior vice president of engineering and infrastructure, further noted in the same blog post.
He added that the company will now work on improving its remediation time and software quality assurance and testing processes.
What’s the damage to Fastly’s stock?
Following the global outage, Oppenheimer analyst Timothy Horan downgraded his rating on the Fastly stock to ‘perform’ from ‘outperform’ without a price target.
He noted that although outages happen to all cloud computing platforms, with Fastly responding‘rapidly and with candor’, customers may now switch to other providers, being that switching costs for content delivery networks are relatively low.
Horan also opined that the disruption could impact Fastly's new sales ‘for a while’, adding that Q2 revenue and margins are also under comparison pressure.
Piper Sandler’s James Fish kept his rating at ‘neutral’ and price target of US$45 in his post-outage note.
However, he noted that Fastly customers could experience an influx of refunds that would likely make its ‘already challenging’ 2021 guidance even ‘more difficult’ to hit.
Given that Fastly’’s customers ‘tend to be very large and operate a multi-CDN strategy’, Fish also believes Fastly may be ‘put in the penalty box’, which could result in traffic share moving toward other CDNs.
He concluded by saying that Fastly is his ‘least preferred’ among CDNs in terms of exposure to the sector.
Trade today’s most talked about stocks with IG
Create an IG account or log in to your existing account to get started now.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.