Fastly Shares Plunge Despite Strong Q1 Results and Upgraded Outlook
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Should l Buy FSLY?
Source: seekingalpha
Fastly shares fell 25.59% in pre-market trading, hitting a 5-day low, following the release of their Q1 results.
Despite reporting a record revenue of $173 million, a 20% year-over-year increase, and raising its 2026 revenue forecast, the stock experienced a significant drop. The market reacted negatively, indicating concerns over valuation after a substantial year-to-date rally, leading to a sharp decline in share price.
The implications of this price movement suggest that while Fastly's fundamentals appear strong, investor sentiment may be cautious, viewing the recent performance as a potential overreaction to the company's optimistic outlook.
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Analyst Views on FSLY
Wall Street analysts forecast FSLY stock price to fall
10 Analyst Rating
2 Buy
7 Hold
1 Sell
Hold
Current: 19.500
Low
10.00
Averages
11.70
High
14.00
Current: 19.500
Low
10.00
Averages
11.70
High
14.00
About FSLY
Fastly, Inc. provides a programmable edge cloud platform that helps the world’s brands deliver online experiences through edge compute, delivery, security, and observability offerings, improving site performance, and enhancing security at a global scale. The Company enables developers to deliver secure Websites and apps. The edge cloud is a category of Infrastructure as a Service (IaaS) that enables developers to build, secure, and deliver digital experiences at the edge of the Internet. The Company’s products and services includes Programmable Edge Platform, Network Services, Security, Compute, Observability, and Services. Its Network services include content delivery network, video / streaming, load balancing, image optimization, and origin connect. Its Security service includes Next-Gen WAF, bot management, DDoS protection, and others. The Company’s professional services include network services, managed security service, and response security service.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Fastly Upgraded to Outperform by Raymond James Following Q1 Results
- Upgrade Announcement: Raymond James upgraded Fastly (FSLY) from Market Perform to Outperform, indicating analyst confidence in the company's operational turnaround, which is expected to drive further stock price appreciation.
- Stock Reaction: Following the upgrade, Fastly's shares rose 3.9% in early trading, reflecting market optimism regarding the company's growth potential, particularly amid increasing demand for network capabilities and security products.
- Traffic Growth: Analysts noted that the rise in AI-related traffic is likely to continue benefiting Fastly's delivery networks, especially as they offer more advanced solutions compared to traditional DIY content delivery networks, enhancing competitive positioning.
- Price Target Set: A price target of $23 was established for Fastly, indicating a positive outlook on its future performance, with expectations that the company will capitalize on the growing demand for its network services.
See More
Fastly Shares Plunge 38.23% Despite Record Q1 Results
- Significant Stock Decline: Fastly's stock plummeted 38.23% to $19.50 at Thursday's close, despite reporting record Q1 results and raising its 2026 sales guidance, as concerns about slowing core networking services growth persisted.
- Surge in Trading Volume: The trading volume reached 47.1 million shares, approximately 208% above its three-month average of 15.3 million shares, indicating strong investor reactions to the company's outlook, even as the broader market remained subdued.
- Sales Growth Slowdown: Although Fastly achieved a 20% sales increase in Q1 and exceeded Wall Street's adjusted EPS estimates, the market reacted negatively to the core networking services segment's only 11% revenue growth, leading to a sharp decline in stock price.
- Future Investment Outlook: Management anticipates that infrastructure capital expenditures will more than double as a percentage of revenue by 2026, and while the security and compute segments saw revenue growth of 67% and 47% respectively, market confidence in future growth remains low.
See More
Fastly Shares Plunge 38.23% Despite Record Q1 Results
- Significant Stock Drop: Fastly's shares closed at $19.50 on Thursday, plummeting 38.23%, as concerns over slowing core networking services growth overshadowed the company's record Q1 results and raised 2026 guidance.
- Surge in Trading Volume: The trading volume reached 47.1 million shares, approximately 208% above the three-month average of 15.3 million shares, indicating a strong market reaction despite the poor stock performance.
- Sales Growth and Profitability: Fastly achieved a 20% sales growth in Q1 and exceeded Wall Street's adjusted EPS estimates; however, the stock declined due to market fears of decelerating future sales growth, even though its core Network Services segment's revenue growth was still double the market rate.
- Strong Performance in New Business Units: Fastly's Security and Compute units delivered revenue growth of 67% and 47%, respectively, indicating that despite the overall slowdown, these emerging segments now account for roughly one-fourth of the company's sales, showcasing potential for future growth.
See More
Fastly's Q1 Results Fall Short of Expectations, Shares Plummet
- Q1 Financial Results: Fastly reported Q1 revenue of $173 million, a 20% increase year-over-year, which beat the $171.8 million estimate; however, it failed to meet market expectations for a larger beat, leading to a significant stock price drop.
- Full-Year Revenue Guidance: The company now forecasts full-year revenue between $710 million and $720 million, with the midpoint falling below the $716.53 million estimate, indicating potential growth slowdown that could impact investor confidence.
- Market Reaction: Fastly's shares tumbled nearly 40% by midday Thursday, and if this trend continues, it will mark the largest single-day percentage decline ever, reflecting investor disappointment over the core delivery business's underperformance.
- Retail Investor Sentiment: Despite the stock's decline, retail sentiment on Stocktwits has turned 'extremely bullish', with users viewing the current dip as a buying opportunity, indicating confidence in the company's long-term potential.
See More
Midday Stock Movements of Major Companies
- Planet Fitness Earnings Downgrade: Planet Fitness shares fell nearly 33% after the gym operator lowered its full-year earnings outlook, now projecting only a 4% year-over-year growth, down from a previous forecast of 9%-10%, which negatively impacts market confidence.
- Vital Farms Surprise Loss: Vital Farms, the egg producer, dropped 20% following a surprise loss of 3 cents per share in Q1, against analyst expectations of a 6-cent profit, and the company also cut its full-year earnings outlook, indicating increasing industry pressures.
- Datadog Exceeds Expectations: Datadog shares surged 28% after reporting Q1 earnings of 61 cents per share, surpassing the 51-cent consensus, with Q2 revenue guidance between $1.07 billion and $1.08 billion, reflecting strong market demand.
- AAON Revenue Surge: AAON, the air conditioning and heating equipment manufacturer, saw its shares soar 40% after Q1 earnings, EBITDA, and revenue all exceeded Wall Street estimates, raising its full-year revenue guidance by as much as 45%, showcasing robust growth potential.
See More
Fastly Shares Plunge Over 35% Despite Beating Q1 Estimates
- Earnings Beat: Fastly reported Q1 revenue of $175 million, a 20% YoY increase, surpassing estimates; however, the full-year revenue guidance was only modestly raised to a 15% YoY growth, indicating potential deceleration that may impact investor confidence.
- Divergent Analyst Ratings: Oppenheimer and Piper Sandler maintained Neutral ratings, with price targets reduced to $27 and $18 respectively, reflecting concerns over disappointing core delivery business performance, especially as pricing remains stable but faces increasing competitive pressures.
- Strong Security Business Growth: Fastly's security revenues surged 47% to $38.8 million, exceeding market expectations, showcasing robust performance in its new security portfolio, which may support future growth prospects.
- Uncertain Market Outlook: While RBC Capital Markets and KeyBanc Capital Markets remain optimistic about Fastly's long-term outlook, analysts are generally cautious about the stability of network services, suggesting that stock prices may be hampered by concerns over whether growth has peaked.
See More
Fastly Upgraded to Outperform by Raymond James Following Q1 Results
- Upgrade Announcement: Raymond James upgraded Fastly (FSLY) from Market Perform to Outperform, indicating analyst confidence in the company's operational turnaround, which is expected to drive further stock price appreciation.
- Stock Reaction: Following the upgrade, Fastly's shares rose 3.9% in early trading, reflecting market optimism regarding the company's growth potential, particularly amid increasing demand for network capabilities and security products.
- Traffic Growth: Analysts noted that the rise in AI-related traffic is likely to continue benefiting Fastly's delivery networks, especially as they offer more advanced solutions compared to traditional DIY content delivery networks, enhancing competitive positioning.
- Price Target Set: A price target of $23 was established for Fastly, indicating a positive outlook on its future performance, with expectations that the company will capitalize on the growing demand for its network services.
See More
Fastly Shares Plunge 38.23% Despite Record Q1 Results
- Significant Stock Decline: Fastly's stock plummeted 38.23% to $19.50 at Thursday's close, despite reporting record Q1 results and raising its 2026 sales guidance, as concerns about slowing core networking services growth persisted.
- Surge in Trading Volume: The trading volume reached 47.1 million shares, approximately 208% above its three-month average of 15.3 million shares, indicating strong investor reactions to the company's outlook, even as the broader market remained subdued.
- Sales Growth Slowdown: Although Fastly achieved a 20% sales increase in Q1 and exceeded Wall Street's adjusted EPS estimates, the market reacted negatively to the core networking services segment's only 11% revenue growth, leading to a sharp decline in stock price.
- Future Investment Outlook: Management anticipates that infrastructure capital expenditures will more than double as a percentage of revenue by 2026, and while the security and compute segments saw revenue growth of 67% and 47% respectively, market confidence in future growth remains low.
See More
Fastly Shares Plunge 38.23% Despite Record Q1 Results
- Significant Stock Drop: Fastly's shares closed at $19.50 on Thursday, plummeting 38.23%, as concerns over slowing core networking services growth overshadowed the company's record Q1 results and raised 2026 guidance.
- Surge in Trading Volume: The trading volume reached 47.1 million shares, approximately 208% above the three-month average of 15.3 million shares, indicating a strong market reaction despite the poor stock performance.
- Sales Growth and Profitability: Fastly achieved a 20% sales growth in Q1 and exceeded Wall Street's adjusted EPS estimates; however, the stock declined due to market fears of decelerating future sales growth, even though its core Network Services segment's revenue growth was still double the market rate.
- Strong Performance in New Business Units: Fastly's Security and Compute units delivered revenue growth of 67% and 47%, respectively, indicating that despite the overall slowdown, these emerging segments now account for roughly one-fourth of the company's sales, showcasing potential for future growth.
See More
Fastly's Q1 Results Fall Short of Expectations, Shares Plummet
- Q1 Financial Results: Fastly reported Q1 revenue of $173 million, a 20% increase year-over-year, which beat the $171.8 million estimate; however, it failed to meet market expectations for a larger beat, leading to a significant stock price drop.
- Full-Year Revenue Guidance: The company now forecasts full-year revenue between $710 million and $720 million, with the midpoint falling below the $716.53 million estimate, indicating potential growth slowdown that could impact investor confidence.
- Market Reaction: Fastly's shares tumbled nearly 40% by midday Thursday, and if this trend continues, it will mark the largest single-day percentage decline ever, reflecting investor disappointment over the core delivery business's underperformance.
- Retail Investor Sentiment: Despite the stock's decline, retail sentiment on Stocktwits has turned 'extremely bullish', with users viewing the current dip as a buying opportunity, indicating confidence in the company's long-term potential.
See More
Midday Stock Movements of Major Companies
- Planet Fitness Earnings Downgrade: Planet Fitness shares fell nearly 33% after the gym operator lowered its full-year earnings outlook, now projecting only a 4% year-over-year growth, down from a previous forecast of 9%-10%, which negatively impacts market confidence.
- Vital Farms Surprise Loss: Vital Farms, the egg producer, dropped 20% following a surprise loss of 3 cents per share in Q1, against analyst expectations of a 6-cent profit, and the company also cut its full-year earnings outlook, indicating increasing industry pressures.
- Datadog Exceeds Expectations: Datadog shares surged 28% after reporting Q1 earnings of 61 cents per share, surpassing the 51-cent consensus, with Q2 revenue guidance between $1.07 billion and $1.08 billion, reflecting strong market demand.
- AAON Revenue Surge: AAON, the air conditioning and heating equipment manufacturer, saw its shares soar 40% after Q1 earnings, EBITDA, and revenue all exceeded Wall Street estimates, raising its full-year revenue guidance by as much as 45%, showcasing robust growth potential.
See More
Fastly Shares Plunge Over 35% Despite Beating Q1 Estimates
- Earnings Beat: Fastly reported Q1 revenue of $175 million, a 20% YoY increase, surpassing estimates; however, the full-year revenue guidance was only modestly raised to a 15% YoY growth, indicating potential deceleration that may impact investor confidence.
- Divergent Analyst Ratings: Oppenheimer and Piper Sandler maintained Neutral ratings, with price targets reduced to $27 and $18 respectively, reflecting concerns over disappointing core delivery business performance, especially as pricing remains stable but faces increasing competitive pressures.
- Strong Security Business Growth: Fastly's security revenues surged 47% to $38.8 million, exceeding market expectations, showcasing robust performance in its new security portfolio, which may support future growth prospects.
- Uncertain Market Outlook: While RBC Capital Markets and KeyBanc Capital Markets remain optimistic about Fastly's long-term outlook, analysts are generally cautious about the stability of network services, suggesting that stock prices may be hampered by concerns over whether growth has peaked.
See More
