Shares of Fastly (NYSE:FSLY) leapt 11.7% on Thursday, as the edge cloud platform recovered some of its recent losses.
Despite posting solid second-quarter results -- which included a 62% year-over-year surge in revenue, to $75 million -- Fastly's stock sold off following its financial release on Aug. 5. Prior to today, its shares had fallen more than 30% from their closing high on Aug. 4.
Part of the reason for the decline was President Trump's threats to ban TikTok in the U.S. The popular video-sharing network is Fastly's largest customer, and investors were understandably concerned about the potential loss of revenue.
In recent days, however, a bidding war for TikTok appears to have broken out. Microsoft, Twitter, and Oracle are all reportedly in talks to acquire TikTok's U.S. operations. With three major U.S. companies potentially making a bid on the Chinese social network, investors are likely growing more optimistic that it will continue to be able to operate in the U.S.
Keeping TikTok as a customer would certainly be beneficial for Fastly's expansion prospects. TikTok is one of the fastest-growing social media platforms in the world, and it could continue to fuel Fastly's growth for years to come.
Yet it's important for investors to note that even if Fastly were to lose TikTok's business, it certainly wouldn't be a death knell for the edge computing platform. Fastly helps to accelerate content delivery for many other rapidly growing companies, such as Shopify. Thus, investors may be assigning too much importance to the high-profile events surrounding TikTok and not enough to Fastly's other growth drivers.