Please ensure Javascript is enabled for purposes of website accessibility

Why Fastly Stock Fell Sharply on Tuesday

By Daniel Sparks - Updated Jun 15, 2021 at 4:42PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Volatility continues for the edge-computing specialist's stock.

What happened

Shares of edge-computing company Fastly (FSLY -5.89%) were hit hard on Tuesday, giving up sharp gains from yesterday.

The stock was likely down primarily because of a broader-market sell-off of tech stocks -- particularly growth tech stocks like Fastly.

A drawing of a digital-looking cloud.

Image source: Getty Images.

So what

Fastly stock was down 5.5% as of 3:30 p.m. EDT. Highlighting the broader-market bearishness weighing on the stock, the tech-heavy Nasdaq Composite was down about 0.7% as of this writing. Many growth stocks like Fastly, however, were down several percentage points or more.

Fastly stock has been hit hard this year, cooling off from big gains in 2020. But shares have started to rebound recently. The stock is up 27% over the past 30 days -- and that includes today's pullback. Nevertheless, some context is in order: Shares are still down 38% year to date.

Now what

Fastly's underlying business has continued to perform quite well in 2021. First-quarter revenue rose 35% year over year to $85 million as the company's edge-computing solutions help serve modern demands from developers for more customizability, reliability, and speed in the delivery and experience of their apps. And that was on top of some pretty tough comparisons in the year-ago quarter.

But Fastly stock's premium valuation after its 335% rise last year has come under the microscope, leading to lots of volatility in its share price recently.

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Fastly. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Fastly, Inc. Stock Quote
Fastly, Inc.
$11.18 (-5.89%) $0.70

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.