What happened

Shares of edge-computing specialist Fastly (FSLY -1.62%) fell sharply on Friday, declining as much as 7.2%. As of 10:15 a.m. EDT today, however, the stock had trimmed its loss to 3.5%.

The stock's decline follows an analyst downgrade Friday morning.

A diagram of three laptops connected to a cloud

Image source: Getty Images.

So what

Piper Sandler analyst James Fish lowered his 12-month price target on Fastly stock from $84 to $65 on Friday. The analyst's move comes after shares plunged last week when Fastly's management said its third-quarter revenue would come in below its previous guidance.

The analyst says that TikTok, the photo- and video-sharing apps owned by Fastly's biggest customer (ByteDance), is "rapidly building" its own content delivery network. And he says the stock's valuation today doesn't fully price in risks.

Now what

Though Fastly did say it expected third-quarter revenue to be lower than it initially expected, revenue for the period is still expected to grow 42% year over year. Furthermore, management emphasized that demand for its platform remains strong.