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Why Fastly Stock Is Up Sharply on Monday

By Daniel Sparks – Aug 9, 2021 at 12:01PM

Key Points

  • Shares are still down significantly for the year.
  • Investors may see the stock's recent pullback as a buying opportunity.
  • Management is guiding for meaningful top-line growth this year.

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The edge-computing stock has now recovered all of its post-earnings decline.

What happened

Shares of edge computing specialist Fastly (FSLY 0.92%) are jumping on Monday. As of 11:25 a.m. EDT, the stock is up 5.4%.

Two factors likely helping the stock are a bullish day for growth stocks overall and further rebounding from the stock's recent post-earnings slide.

A chart showing a stock price rising.

Image source: Getty Images.

So what

Fastly stock plunged earlier this month after the company released disappointing second-quarter results. Revenue growth decelerated significantly during the quarter as the company faced a tough year-ago comparison and as an outage negatively impacted the quarter's financials.

The stock has been recovering since then, with shares regaining almost all of their post-earnings decline. Perhaps investors think the stock was oversold. After all, even after the stock's post-earnings recovery in recent trading days, shares are still down more than 50% this year.

Now what

Despite tough year-ago comparisons, Fastly still expects its top line to grow significantly this year. Its recent acquisition of security company Signal Sciences is expected to contribute to some of this growth.

Management guided for full-year revenue to be between $340 million and $350 million, up from 2020 revenue of $291 million.

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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