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Fastly (FSLY - Free Report) is a Zacks Rank #5 (Strong Sell) that provides infrastructure software. The company offers cloud computing, game optimization, security, edge computer technology and streaming solutions.
2020 was a great year for investors, with the stock running from $20-$136 over the course of five months. However, the stock got ahead of itself and has become very volatile over the last few months on valuation concerns.
Recent earnings added more questions and the stock has fallen over 30% in February. Now the bulls are questioning their next move as the stock falls to the 200-day moving average.
More about Fastly
The company is headquartered in San Francisco, CA and was founded in 2011. Fastly is valued around $9 Billion and has Zacks Style Scores of “A” in Momentum and “B” in Growth, but “D” in Value.
Some popular customers on the company are TikTok, Buzzfeed, Financial Times, Kayak, Wayfair and Shopify.
Q4 Earnings
On February 17th Fastly reported Q4 EPS, seeing a 10% EPS beat. Revenues were only a slight beat and the company guided Q1 and FY21 EPS lower. The total customer count, came in at $2.08k v the 2.05k last quarter.
The quarter had many concerned over multiple issues, especially with accelerating losses and slowing organic growth. While the company is gaining market share, some analysts are suggesting that cash burn rates might force a capital raise.
Estimates
Analyst dropped estimates after the earnings report, which likely caused the drop in the Zacks Rank. For the current year, the last 7 days have seen a fall in Estimates dropped from -$0.19 to -$0.22. For next year, it was estimated the company would turn a profit, but that too has been lowered back down to -$0.03. While analysts collectively are dropping numbers, some raised their price target after the quarter.
Volatility to Remain.
There are two different views of this stock and the bulls will have issues until the company prove the gaining of market share turns in to growth. The stock has a Beta of 1.27, which means its more volatile than the overall market. I would expect the bulls and bears to continue to fight and volatility to persist in the name.
The Technicals
FSLY has meandered back and forth around the 50-day moving average since September of last year. Now the stock has fallen to the 200-day and the bulls will have to prove themselves and hold this level. The stock hasn’t been below the 200-day since May of 2020 and we could see a rather large stop run from traders that depend on the technicals.
Looking at Fibonacci levels, the stock saw one big retracement since the breakout back in May. The $62 level saw a big bounce, but the $58.50 level is the 61.8% from the March lows to recent highs. The stock may have room lower if current levels fail to hold.
In Summary
Fastly has good long-term prospects. However, short-term concerns on both the fundamental and technical fronts could bring a big shakeout in the weeks to come. Be patient with a stock that trends lower and wait for good trade location.
For those that want to be in this space, CrowdStrike (CRWD) and Anaplan (PLAN) are both good alternatives with Zacks Ranks of #2 (Buy).
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Bear of the Day: Fastly (FSLY)
Fastly (FSLY - Free Report) is a Zacks Rank #5 (Strong Sell) that provides infrastructure software. The company offers cloud computing, game optimization, security, edge computer technology and streaming solutions.
2020 was a great year for investors, with the stock running from $20-$136 over the course of five months. However, the stock got ahead of itself and has become very volatile over the last few months on valuation concerns.
Recent earnings added more questions and the stock has fallen over 30% in February. Now the bulls are questioning their next move as the stock falls to the 200-day moving average.
More about Fastly
The company is headquartered in San Francisco, CA and was founded in 2011. Fastly is valued around $9 Billion and has Zacks Style Scores of “A” in Momentum and “B” in Growth, but “D” in Value.
Some popular customers on the company are TikTok, Buzzfeed, Financial Times, Kayak, Wayfair and Shopify.
Q4 Earnings
On February 17th Fastly reported Q4 EPS, seeing a 10% EPS beat. Revenues were only a slight beat and the company guided Q1 and FY21 EPS lower. The total customer count, came in at $2.08k v the 2.05k last quarter.
The quarter had many concerned over multiple issues, especially with accelerating losses and slowing organic growth. While the company is gaining market share, some analysts are suggesting that cash burn rates might force a capital raise.
Estimates
Analyst dropped estimates after the earnings report, which likely caused the drop in the Zacks Rank. For the current year, the last 7 days have seen a fall in Estimates dropped from -$0.19 to -$0.22. For next year, it was estimated the company would turn a profit, but that too has been lowered back down to -$0.03. While analysts collectively are dropping numbers, some raised their price target after the quarter.
Volatility to Remain.
There are two different views of this stock and the bulls will have issues until the company prove the gaining of market share turns in to growth. The stock has a Beta of 1.27, which means its more volatile than the overall market. I would expect the bulls and bears to continue to fight and volatility to persist in the name.
The Technicals
FSLY has meandered back and forth around the 50-day moving average since September of last year. Now the stock has fallen to the 200-day and the bulls will have to prove themselves and hold this level. The stock hasn’t been below the 200-day since May of 2020 and we could see a rather large stop run from traders that depend on the technicals.
Looking at Fibonacci levels, the stock saw one big retracement since the breakout back in May. The $62 level saw a big bounce, but the $58.50 level is the 61.8% from the March lows to recent highs. The stock may have room lower if current levels fail to hold.
In Summary
Fastly has good long-term prospects. However, short-term concerns on both the fundamental and technical fronts could bring a big shakeout in the weeks to come. Be patient with a stock that trends lower and wait for good trade location.
For those that want to be in this space, CrowdStrike (CRWD) and Anaplan (PLAN) are both good alternatives with Zacks Ranks of #2 (Buy).
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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