Should You Invest in Fastly?
Fastly Incorporation is an edge cloud computing company based in the United States with customers around the world. It processes, secures, stores, and serves customers data on a series of cloud platforms.
Why You Should?
- The COVID-19 Pandemic has benefited Fastly’s growth as the stock price shot up as investors looked to put their money in cloud providers like Fastly. This is because investors believe and results show that cloud providers will see demand for their services skyrocket due to increased digitization due to the pandemic. This has benefited Fastly.
- Fastly’s services are used by large enterprise customers. It is a cloud provider for ByteDance, the parent company of TikTok, Reddit, Spotify, Pinterest, and many others. All of these companies have done well during this pandemic and so has Fastly as a result of this.
- Fastly is a solid long-term growth company because of its position in the cloud provider industry, something that might be worth over 1 trillion dollars in the future as companies further digitize their operations. This growth for the industry will cause the demand for Fastly’s products to also increase, which will benefit the company and cause the stock price to increase.
- Fastly has seen its revenues rise over the past couple of financial years due to the factors mentioned above. This will help the company build a stronger balance sheet which will help them expand in the cloud provider industry. This will benefit the company in the future. In the financial year of 2019, the company reported revenues of around 200.5 million. This metric is higher than what the company reported in the financial year of 2018 when it had revenues of around 144.5 million.
Why You Should Not?
- Fastly was valued at over 130 dollars a couple of weeks ago, but quickly fell due to disappointing numbers. As investors bailed on the company, the stock price fell to around 80 dollars. However, the company still trades at no price to earnings (the company has lost money and the price of the stock does not justify this). This makes the company susceptible to volatility.
- Fastly faces some tough competition from companies like Google, who operate Google Cloud, IBM, Amazon, who operate AWS, and many others. This might hurt the company’s future growth in this space.
- Fastly has never been profitable over its history and has actually reported wider losses over the past couple of financial years despite reporting higher revenues. The company looks for this to change in the long run but this might hurt the company’s future growth plan. In the financial year of 2019, they reported a loss of around 51.5 million, much higher than what they reported in the previous financial year when they reported a loss of around 31 million.
In my opinion, I think that Fastly is a great long-term investment due to its strong customer base made up of enterprise companies like Pinterest. A strong future industry will further prop up the stock price and the company’s results. However, investors need to know that Fastly is a volatile investment as it has not reported a profit yet. Competition might also hurt Fastly in the future.