In today's video, I look at Fastly (FSLY 1.23%). The company just reported earnings, and the stock price is down. Below I share both bearish and bullish points.
Three reasons Fastly is down:
- The guidance Fastly provided for next quarter is not meeting the expectations of some analysts. Fastly expects revenue of $84 million to $87 million compared to analyst projections of $90 million.
- Fastly has seen an increase in operating expenses, with a GAAP operating loss of $50 million for Q1 2021 compared to $12 million a year ago. It reported a non-GAAP operation loss of $13 million for Q1 2021 compared to $6 million a year ago.
- The CFO is stepping down after five years of service, and this change in the executive team has a few investors worried. The CFO will stay until a successor is appointed and will help with the transition period.
Three reasons this could be a buying opportunity for Fastly:
- Fastly increased its fiscal year 2021 guidance by $5 million on both the top and bottom ends of its previous guidance, to now be from $375 million to $385 million.
- This quarter was the largest net add in total customers (+123) and enterprise customers (+12) for Fastly compared to the past five quarters. Enterprise customers make up nearly 90% of trailing-12-months revenue.
- Fastly is sitting at a nearly 10 times forward price-to-sales ratio at current prices.
Click the video below for my full thoughts.
*Stock prices used were the midday prices of May 6, 2021. The video was published on May 6, 2021.