Why Fastly stock plummeted today
Fastly’s new forward guidance is a flashing warning signal.
fast (FSLY -32.02%) Stocks tumbled in trading Thursday. Shares of the content delivery network company ended the daily session down 32%, according to data from S&P Global Market Intelligence.
Fastly released its first quarter report after the market closed on Wednesday with mixed results. The company’s loss per share was lower than expected, but its revenue was below Wall Street targets. To make matters worse, edge computing experts have significantly lowered their annual performance goals.
Fastly’s growth is slowing
Fastly’s revenue grew about 13.6% year-over-year to $133.52 million in the first quarter, but this performance was $350,000 short of the average analyst estimate. The company posted a non-GAAP (adjusted) loss of $0.05 per share for the quarter, beating the average Wall Street target by $0.01.
Fastly posted solid revenue growth in the first quarter, but its near-term earnings outlook isn’t great. The companies ended the first quarter with $227 million in remaining performance obligations, a 4% year-over-year decrease compared to the total at the end of last year’s quarter.
Fastly stock is currently down about 51% in 2024 trading. The stock price has also fallen 93% compared to its lifetime high in October 2020.
Fastly’s new guidelines are flashing warning signs.
Fastly said it expects second-quarter revenue to be between $130 million and $134 million. The guidance range was significantly lower than the average Wall Street estimate, which had called for revenue of $140.3 million in the period.
Meanwhile, management guided for full-year revenue between $555 million and $565 million, which represents a significant downward revision from the company’s previous revenue target of between $580 million and $590 million.
Following disappointing results and guidance, bank of america Analyst Madeline Brooks lowered her rating on the stock from Buy to Underperform and lowered her one-year price target from $18 per share to $8. With Fastly closing trading Thursday at $8.79 per share, Brooks’ target implies another decline of about 9%.
Bank of America is an advertising partner of The Ascent, a Motley Fool company. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Bank of America and Fastly. The Motley Fool has a disclosure policy.
