What happened
The stock market was having a generally negative day on Thursday, with all three major averages down by more than 1% at 10 a.m. ET. However, edge computing company Fastly (FSLY 2.87%) was having an awful day, with shares down by 30% to a new 52-week low.
So what
As you might expect, the plunge is related to Fastly's fourth-quarter earnings report, which was released on Wednesday afternoon.
Image source: Getty Images.
The problem wasn't the company's fourth-quarter numbers. In fact, revenue grew by 13% year over year, surpassing analyst expectations, and Fastly posted a narrower adjusted loss than analysts had been expecting.
Instead, it was Fastly's 2022 guidance that seems to be the biggest negative. The company is expecting revenue between $97 million and $100 million for the first quarter. It generated $97.7 million in the fourth quarter of 2021, so this is essentially calling for flat revenue growth. And for the full year, the guidance range of $400 million to $410 million doesn't imply much growth in the second through fourth quarters either.
Now what
In a nutshell, investors don't seem too excited about a business with stagnant growth that was trading for about 10 times sales (before this plunge) and is projected to lose about $65 million next year. And it's tough to blame them. If Fastly's management can turn things around, the current share price could end up being a bargain, but that's looking like a very big "if" at this point.
