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Mark O' Donnell
Research Analyst
October 9, 2020

Stock of the week: Fastly

Stock of the week: Fastly

Fastly provides real-time content delivery network services. They’re basically the summary of all the tech buzzwords you can think of. Take a look at their offerings.

  • Edge cloud platform
  • Edge software development kits
  • Content Delivery and image optimization
  • Video and Streaming
  • Cloud Security

Fastly stock price has returned 438% for investors in the past year. What is interesting about this company is not the services they offer; its who they offer it to. Their current clients include Shopify, Spotify, Slack, and most notably – TikTok. I say notably, as the stock saw an almost 30% drop on threats that Trump wanted to ban the popular app, used by over 100 Million American monthly users. It has since rallied back to its all-time high on stimulus talks and the threat of TikTok subsiding.

Fastly has done well for investors this year despite the Coronavirus hammering most stocks

Fastly’s Catalysts:

Fastly was able to capitalize on the pandemic, and it has shown in its stock price and the stock price of its competitors. Akamai Technologies and Limelight Network have returned around 17% and 81% year to date, respectively. With their big-ticket clients such as the ones stated above alongside Ticketmaster and Github, other potential big-ticket clients are more likely to join their Fastly than their competitors.

Fastly’s Risks:

It is priced to PERFECTION. Being another hyped tech firm, which does not make any profits, the next earnings season will require them to blow it out of the park or else risk a sell-off. Furthermore, the cloud computing market is quite competitive, with many big players in the space such as Microsoft, Amazon, and Google, forcing the market to be a race to the bottom line. Given that Fastly is still not profitable, this is a high risk for the company.

Fastly: Conclusion

Fastly has been beating expectations for the past couple of quarters. With founder Artur Bergman continuing to be an integral part of the company, its future guidance will remain stable. You may want to buy this company on a pullback – however, its current lofty valuation makes it hard to justify at its current price.

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