FSLY - Fastly: Fear Creates Opportunity (Rating Upgrade)

2024-05-02 07:33:15 ET

Summary

• Fastly's shares dropped 30% after submitting a weak revenue forecast for Q2'24.
• Despite the soft Q2 outlook, FSLY showed strong Q1 performance with a growing customer base and increasing margins.
• The market overreacted to the revenue forecast, in my opinion, creating an entry opportunity for contrarian investors.

Shares of Fastly ( FSLY ) were down 30% after the cloud-edge computing company reported results for its first-quarter and disappointed the market with a weak revenue forecast for Q2'24. The market very likely overreacted to the company's top-line outlook, in my opinion, and with a promising margin trend, I believe investors have been overly focused on the negatives in Fastly's earnings report. With growing GAAP margins and still double-digit top-line momentum expected for FY 2024, I believe the value proposition is better than investors think it is, especially for long-term investors that have a stomach for price volatility....

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