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Why Fastly's Stock Is Rising Today

By Chris Neiger – Aug 27, 2020 at 3:48PM

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Fastly investors were happy to hear that the company is buying Signal Sciences.

What happened

Shares of Fastly, Inc. (FSLY 2.57%) were rising today after the company announced that it will acquire Signal Sciences for about $775 million in cash and stock. The acquisition will help Fastly expand its security in the edge-computing market. 

The company's shares rose by as much as 11.1% during trading today before settling lower. As of 3:12 p.m. EDT, Fastly's stock was up 5.7%. 

So what 

Fastly's existing security solutions will be combined with Signal Sciences' technology to create a new offering called [email protected] The company said in a press release that the new service will be a unified web application and API protection solution for companies. 

An ascending arrow on top of a blue bar chart.

Image source: Getty Images.

Fastly CEO Joshua Bixby said in the releas:

Together with Signal Sciences, we will give developers modern security tools designed for the way they work. This new solution will integrate with our [email protected] platform, accelerating the adoption of edge computing, while simultaneously solving for modern security challenges.

Investors were happy to see that Fastly is expanding its security offerings and immediately began pushing up the company's share price in morning trading today. Today's share-price jump contributes to the company's meteoric stock-price gain of 240% over the past 12 months.

Now what 

The company reported its second-quarter results at the beginning of this month, with revenue jumping 62% to $75 million. Fastly's management raised its revenue outlook at the time and now expects full-year sales in the range of $290 million to $300 million, up from the previous estimate of $280 million to $290 million. https://investors.fastly.com/files/doc_financials/2020/q2/2Q20-Shareholder-Letter.pdf With the latest share-price gains of today, it appears Fastly investors are expecting the company to continue growing at a rapid pace.

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.

Stocks Mentioned

Fastly Stock Quote
Fastly
FSLY
$9.59 (2.57%) $0.24

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