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Why Fastly Stock Is Down Today

By Daniel Sparks – Aug 4, 2021 at 1:37PM

Key Points

  • The edge computing company's stock has now fallen more than 50% this year.
  • Investors may be nervous about how Fastly's top line will compare to its strong year-ago quarter.
  • Fastly reports earnings after market close today.

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Shares are trading lower ahead of earnings.

What happened

Shares of edge computing specialist Fastly (FSLY 9.77%) fell sharply on Wednesday. As of 12:45 p.m. EDT, the stock was down 4.8%.

The stock's decline comes ahead of the tech company's earnings release after market close today, implying there are some concerns from investors regarding whether the company will be able to post results that will impress the market.

Workers in computer server room.

Image source: Getty Images.

So what

Analysts, on average, expect Fastly's revenue to grow 14.8% year over year to $85.7 million. Further, investors are expecting the company's non-GAAP (adjusted) earnings per share to swing from a profit of $0.02 in the year-ago quarter to a loss of $0.17 as incremental expenses from the company's recent Signal Sciences acquisition weigh on profitability.

Analysts' consensus view for revenue and earnings are both notably in line with management's guidance for the period. Fastly guided for second-quarter revenue to be between $84 million and $87 million and non-GAAP earnings per share to be between a loss of $0.19 and a loss of $0.16.

Now what

Expectations imply a significant revenue growth deceleration from Fastly. The deceleration, however, makes sense in light of the company's tough year-ago comparison that benefited from increased internet usage as consumers were spending more time at home.

Fastly will announce its second-quarter results after market close today. It's generally extremely difficult to guess how a market will react to a company's earnings report. Investors may want to tune into the company's results when they go live after the bell to check on how well Fastly's business is performing.

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.

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