Fastly(NYSE: FSLY) stock cratered in Thursday's trading. The content-delivery-network company's share price closed out the daily session down 32%, according to data from S&P Global Market Intelligence.
Fastly published its first-quarter report after the market closed on Wednesday, delivering mixed results. While the company's loss per share was lower than anticipated, its revenue came in lower than Wall Street's target. Making matters worse, the edge-computing specialist significantly lowered its full-year performance targets.
Fastly's growth is slowing
Fastly's revenue increased roughly 13.6% year over year to come in at $133.52 million in Q1, but this performance fell short of the average analyst estimate by $0.35 million. The business posted a non-GAAP (adjusted) loss of $0.05 per share in the quarter, beating the average Wall Street target by $0.01.
Even though Fastly posted a solid sales increase in the first quarter, its near-term performance outlook isn't encouraging. They company closed out Q1 with remaining performance obligations of $227 million, representing a 4% year-over-year decline compared with the total at the end of last year's quarter.
Fastly stock is now down roughly 51% across 2024's trading. Its share price is also down a staggering 93% from the lifetime high it reached in October 2020.
Fastly's new guidance flashes warning signs
Fastly said it was expecting second-quarter sales to come in between $130 million and $134 million. The guidance range came in significantly below the average Wall Street estimate, which had called for sales of $140.3 million in the period.
Meanwhile, management guided for full-year sales to come in between $555 million and $565 million, representing a significant downward revision from the company's previous target for sales to be between $580 million and $590 million.
Following the underwhelming results and guidance, Bank of America analyst Madeline Brooks cut her rating on the stock from buy to underperform and lowered her one-year price target on the stock from $18 per share to $8. With Fastly closing out Thursday's trading priced at $8.79 per share, Brooks' target implies additional downside of roughly 9%.
Should you invest $1,000 in Fastly right now?
Before you buy stock in Fastly, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Fastly wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of April 30, 2024
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 has positions in and recommends Bank of America and Fastly. The Motley Fool has a disclosure policy.
