In this video I will be talking about Fastly's (NYSE:FSLY) recent internet outage, why the stock is actually up 40% since its last earnings report, and the effect of cloud gaming on Fastly.

Internet outage

On June 8, for about an hour, the internet broke. Websites including Amazon, Reddit, Spotify, eBay, Twitch, and Pinterest went offline due to a major outage at Fastly. Weirdly enough, the stock went up 12% the same day. When something bad happens to a public company, the stock price usually goes down, but not this time. The speculation is that the outage actually revealed a number of unknown clients. Seeing who these clients were might have assured investors that Fastly is actually relied on by a broad range of companies, including some of the biggest ones.

Another reason for the uptick might be that this issue got resolved in a little over an hour. This might have impressed investors and calmed down the above-mentioned companies. Obviously, should such issues arise more frequently, the market might act differently. 

It seems this outage was a case of "there's no such thing as bad publicity."

Cloud gaming

The gaming industry has never been this big, and there are no signs of it slowing down. There are currently 3 billion gamers worldwide. It's a $200 billion top-line total addressable market (TAM) business that grew at double digits last year.

Microsoft (NASDAQ:MSFT) recently announced that it will expand Xbox Cloud Gaming, but says streaming won't replace consoles any time soon. The rebranded Project xCloud lets you stream Microsoft's Game Pass titles to PC, Android phones, and tablets. It relies on Microsoft's Azure cloud platform so it seamlessly syncs data across devices. Gamers want their games to load fast and play without any lag, and who better to serve this need than Fastly?  

With its edge cloud platform, Fastly aims to deliver faster, safer, and more scalable experiences to people around the world. So it is safe to say that Fastly is well positioned to cater to the switch from native gaming to cloud gaming. 

Do watch the video below for the full insights.

*Stock prices used were the closing prices of June 18, 2021. The video was published on June 20, 2021.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.