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My Take: Is This a Buying Opportunity for Fastly?

By Jose Najarro - May 7, 2021 at 8:00AM

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Fastly just reported earnings, and the stock price is down. Is this a buying opportunity?

In today's video, I look at Fastly (FSLY -2.45%). The company just reported earnings, and the stock price is down. Below I share both bearish and bullish points. 

Three reasons Fastly is down: 

  1. 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.
  2. 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.
  3. 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: 

  1. 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.  
  2. 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.
  3. 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. 

Jose Najarro owns shares of Fastly. The Motley Fool owns shares of and recommends Fastly. The Motley Fool has a disclosure policy. Jose is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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Stocks Mentioned

Fastly, Inc. Stock Quote
Fastly, Inc.
$11.55 (-2.45%) $0.29

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