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Here's Why Fastly's Shares Are Falling Today

By Chris Neiger – Updated Jul 10, 2020 at 11:12AM

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Investors were quick to react to the company's stock being downgraded.

What happened

Shares of Fastly (FSLY -3.24%), an edge cloud computing platform company, were falling today after its stock received a downgrade. The company's stock fell by as much as 7.2% during morning trading.

As of 10:51 a.m EDT, Fastly's stock was down 5.2%.

So what 

Some Fastly investors were spooked today as Bank of America (BofA) Securities analyst Tal Liani downgraded the company's stock from buy to underperform. Liani noted that Fastly's current valuation assumes the company will have "near-perfect execution."

A red line chart pointing down

Image source: Getty Images.

Today's stock downgrade comes as Fastly's share price has gained 365% over the past three months. Investors have been generally very optimistic about Fastly because the company helps businesses speed up their websites and apps -- things that businesses have relied on even more than before because of the coronavirus pandemic. 

While the company's stock took a hit today, investors should know that the slide came only from shifting sentiment from some investors and not from anything to do with any changes to the company's underlying business.

Now what 

BofA Securities' downgrade took some of the wind out of Fastly's sails, but with the company already growing at a healthy clip, many investors are still focusing on Fastly's long-term prospects. Investors should know, though, that with rising coronavirus cases and U.S. unemployment at 11%, the stock market will likely face some volatility ahead.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Fastly. The Motley Fool has a disclosure policy.

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