Shares of cloud-computing specialist Fastly (NYSE:FSLY) fell sharply on Thursday, declining 12.5% by the time the market closed. The stock was likely simply taking a natural pause after an astounding 115% run-up between Aug. 14 and Aug. 28.
Shares rose again on Friday, up more than 13% at 3:40 p.m.
Here's what investors should know about all this volatility.
Since Fastly went public earlier this year, the stock has been on a roller-coaster ride. After gaining 50% on its first day of trading in May, it failed to gain more traction leading up to Fastly's inaugural quarterly update as a publicly traded business. After the report, shares initially pulled back.
But analyst upgrades for the tech stock following the Aug. 8 earnings release reversed the market sentiment, and shares proceeded to skyrocket. Following this 115% run-up, the stock was hit with a 12.5% decline on Thursday -- a natural cooling-off period for shares on such a torrid upward march. But shares are climbing higher again on Friday, rising about 8% as of 12:37 p.m. EDT.
There's an argument that much of the stock's wild volatility is the result of the dwindling supply of Fastly shares, as one investment firm -- Abdiel -- has been gobbling them up, reducing Fastly's total float by about 29%. Furthermore, after such big gains for the stock, some investors could be on edge due to fears it could come back down after a lock-up period for insiders expires in November.
Investors, of course, should remain focused on the company's fundamentals and the stock's valuation. Shares are significantly more expensive today than they were a few months ago. But Fastly is notably growing at a solid rate, with second-quarter revenue up 34% year over year. The company also boasts an impressive dollar-based net expansion rate of 132%, highlighting how existing customers are ramping up their spending with Fastly.