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Why Fastly Stock Gained This Week

By Evan Niu, CFA - Jun 11, 2021 at 11:37AM

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The content delivery network (CDN) specialist experienced a service outage that could tarnish its reputation but that deepens its relationship with Apple.

What happened

Shares of Fastly (FSLY -0.63%) have enjoyed a strong week, having gained 14% as of 11:55 a.m. EDT on Friday. Here's all the news for the content delivery network (CDN) specialist from the week.

So what

Fastly experienced a service outage on Tuesday that took down broad swaths of the internet, but investors were impressed with the company's ability to respond quickly and fix the underlying issue in less than an hour. The technology company subsequently said that the problem was triggered by a single customer who had changed configuration settings.

Stock chart going up

Image source: Getty Images.

"Even though there were specific conditions that triggered this outage, we should have anticipated it," Fastly engineering and infrastructure exec Nick Rockwell said in an update around the incident. "We provide mission critical services, and we treat any action that can cause service issues with the utmost sensitivity and priority."

Oppenheimer downgraded Fastly from outperform to perform on Thursday over concerns that the outage could cause customers to switch CDN providers, since switching costs are relatively low.

Now what

Separately, Apple kicked off its annual WWDC developer conference this week, unveiling a new privacy feature that routes traffic using private relay technology in order to protect user identity and reduce the risk of personal information being leaked. Streaming media analyst Dan Rayburn confirmed that Apple will tap Fastly, Akamai, and Cloudflare to power the new feature. However, the monetization and revenue potential associated with facilitating private relay is minimal, according to Rayburn.

Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple, Cloudflare, Inc., and Fastly. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Fastly, Inc. Stock Quote
Fastly, Inc.
$11.11 (-0.63%) $0.07
Apple Inc. Stock Quote
Apple Inc.
$174.15 (-0.23%) $0.40
Akamai Technologies, Inc. Stock Quote
Akamai Technologies, Inc.
$96.80 (1.13%) $1.08
Cloudflare, Inc. Stock Quote
Cloudflare, Inc.
$73.04 (-1.97%) $-1.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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