Shares of internet infrastructure outfit Fastly (FSLY -0.18%) were up more than 10% today as of 12:55 p.m. EST. A relief rally seems to be underway for the beaten-down technologist. After yet another attempted run higher in October and early November, shares were down as much as 30% since Nov. 8 due to a lackluster third-quarter 2021 earnings report followed by a general growth stock sell-off fueled by omicron variant worries.
It's been a rough year for Fastly. Since last closing back in on its all-time high in January 2021, the stock has crashed, then rallied, then crashed again multiple times. As of this writing, shares are down 50% on the year with just weeks to go until 2022.
Meanwhile, fellow web content delivery network (CDN) Cloudflare (NET -1.03%) has been on an absolute tear (up 108% year to date at the moment) as the company has consistently reported just over 50% year-over-year revenue growth throughout the last year. In contrast, Fastly grew revenue just 23% in Q3, reporting it recovered lost web traffic from some of it largest customers after a service outage earlier this year.
The good news is that Fastly is still expanding its relationship with many of its users, and it's adding plenty of new customers to its network as well. And while year-over-year sales growth compared with the pandemic boom of 2020 has slowed, management did indicate it expects its Q4 sales to rise a healthy 3% to 7% over and above Q3 levels. Shareholders that are exercising patience here can at least take solace in the fact that the company is still benefiting from the edge computing movement.
Nevertheless, trading for about 14.5 times expected current year sales and still generating ample losses, Fastly remains a premium-priced stock. I would remain cautious until the company can demonstrate an acceleration in its growth trajectory.