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Fastly Inc FSLY

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Fastly’s Q2 Suffers From Network Outage, Loss of Pandemic Boost, but 2H May Be Worse; Cut FVE to $35

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

Fastly’s second-quarter revenue and adjusted EBITDA were generally in line with FactSet consensus estimates, but underlying metrics showed worrisome deterioration, and the firm reduced 2021 sales and earnings guidance significantly. We’re questioning whether Fastly can attain the hyper growth we think is required to justify recent stock levels. We’re reducing our fair value estimate to $35 from $48, and we’d recommend an outsize margin of safety before being tempted by this very high uncertainty stock. 

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Company Profile

Business Description

Fastly operates a content delivery network (CDN), which is necessary for entities to provide faster and more reliable online content. Fastly’s strategy differs from traditional CDNs, which focused on locating servers in as many locations as possible to store copies of files that consumers most use. Fastly is far fewer sites than traditional CDNs, but it houses servers in the most network-dense data centers. Instead of simply storing static content, it allows its customers to program on its platform, enabling edge computing and better service of the more dynamic content that was traditionally not well served by CDNs. Fastly gears its service to the largest, most sophisticated enterprises rather than small companies and generated about two thirds of its revenue in the United States in 2020.

Contact
475 Brannan Street, Suite 300
San Francisco, CA, 94107
T +1 844 432-7859
Sector Technology
Industry Software - Application
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Speculative Growth
Employees 993

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