What happened
Few investors were quick to pile into Fastly (FSLY 3.90%) stock on Wednesday. Shares of the content delivery network (CDN) operator closed the day more than 3% lower, on concerns about a fresh acquisition announced by the company.
So what
Fastly announced that morning that it has acquired Fanout, a privately held company that, according to the buyer, runs "a platform that makes it easy to build and scale real-time and streaming APIs such as live chat support, e-commerce, video streaming, gaming, collaborative editing, and more."
Image source: Getty Images.
Neither the terms nor the price of the deal were disclosed, which is likely the root of investors' concerns. Shareholders generally like to know, at the very least, what a new asset is costing their company.
Regardless, Fastly wrote in its press release trumpeting the deal that "The integration of Fanout technology into Fastly's powerful network will help enable real-time app development at the edge with increased time-to-market, reduced friction, and unprecedented scale."
Fanout's proxy is to be integrated into Fastly's Compute@Edge server-less product, the latter company said.
Fastly and Fanout are hardly strangers to each other. In an official company blog post complementing the press release, Fastly wrote that the two tech companies had been collaborating from time to time for over four years.
Now what
If what Fastly is saying about Fanout is accurate, this acquisition is a complementary one that can bolster its offerings and make it a stronger player in a competitive business.
Without knowing any of the particulars of the deal, though, it's a bit tough to judge whether it was worth the price. Judging by the investor reaction to it, many believe it was rather pricey. Hopefully we'll get more details about it before long.
