Watching day-to-day movements on Wall Street lately has been enough to make anybody feel a little queasy, as volatility has brought an abrupt halt to the big gains the stock market saw in 2020 and most of 2021. Concerns continued to linger Thursday morning, and that weighed on sentiment for how the trading session would go. As of 8 a.m. ET, futures on the Dow Jones Industrial Average (^DJI +0.11%) were down 71 points to 34,780. S&P 500 (^GSPC 0.39%) futures had declined 12 points to 4,458, while Nasdaq Composite (^IXIC 0.73%) futures were down 52 points to 14,548.
The cloud computing arena has been a huge moneymaker for investors over the past several years, with many companies standing out from the crowd to produce amazing returns. However, the track record among cloud stocks hasn't been 100%. This morning, shares of Amplitude (AMPL +6.40%) and Fastly (FSLY 6.78%) posted large new losses after releasing their latest financial results, as investors didn't see enough positive news to help them regain their confidence about the two cloud companies' long-term prospects.
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Slowing growth at Amplitude
Shares of Amplitude plunged 40% in premarket trading on Thursday morning. The digital optimization platform specialist continued to see its business grow, but not at the rate that investors had counted on in order to justify the stock's previously high valuation.
Amplitude's numbers looked reasonable on their face. Fourth-quarter revenue was up 64% year over year to $49.4 million. That brought total sales for 2021 to $167.3 million, rising 63% from 2020 levels. Remaining performance obligations under current contracts saw similar growth of 60% to $137.3 million. Amplitude's customer count grew 54% to nearly 1,600, and dollar-based net retention rates climbed 4 percentage points to 123%.
However, investors were definitely not pleased at Amplitude's forecast for 2022. The company sees full-year revenue of between $226 million and $234 million, which would imply growth rates slowing to below 40%. Moreover, Amplitude expects further deterioration in its bottom line, with even larger adjusted net losses of $0.42 to $0.44 per share in 2022 than the $0.30-per-share loss figure for 2021.
Throughout much of the past couple of years, investors were willing to pay valuations of 20 to 30 times forward sales estimates for the prospects of ultra-fast growth. However, the environment has changed, and fears of a slowdown at Amplitude were enough to crush shareholder sentiment Thursday.
Fastly tries to regroup
Elsewhere, shares of Fastly fell more than 30% in premarket trading Thursday morning. The edge cloud network provider has had a tough time living up to the high expectations of its investors, and the company's latest financial report didn't allay concerns about Fastly's future prospects.
Fastly's fourth-quarter numbers confirmed the slowdown that most shareholders had already expected. Revenue of $97.7 million was up just 18% year over year, and adjusted net losses widened slightly to $0.10 per share. For 2021 as a whole, sales of $354.3 million corresponded to 22% growth from 2020 levels, with adjusted net losses ballooning to $0.48 per share. However, customers did remain loyal, with net retention rates rising to 118% and dollar-based net expansion rates improving to 121% during the quarter.
However, what came as a new shock was the idea that Fastly might not see a full recovery in 2022. Revenue projections for $400 million to $410 million for the full year would work out to just 13% to 16% sales growth. Adjusted losses of $0.50 to $0.60 per share would be even worse than in 2021.
Fastly has gone through tough times, and investors have been slow to get their confidence back. Fastly's latest report tried to showcase some optimism about what the future might bring for its business, but shareholders want more tangible proof before they'll regain their enthusiasm.
