Its time to breakdown a new name on the block. Here is the breakdown of $FSLY otherwise known as Fastly.
Current Price: $80.50
52/Wk High: $117.79
52/Wk Low: $10.63
Read below for the breakdown!
Fastly has stormed onto the stage and was quickly deemed one of the “stay at home” stocks of the COVID-19 pandemic.
$FSLY is a content delivery network in which delivers in several segments. Those segments include security, streaming, private content delivery, and last but not least eCommerce.
Since the March lows, $FSLY has been on fire and rightfully so. With growth on the top and bottom end along with a booming business sector, the stock was poised to rise in the first place.
In the most recently reported earnings, Fastly management reported that total customers have increased to 1,951 since the first quarter (then 1,837 customers).
Not only that but the boom in the company’s business is quickly expanding margins and improving the companies financial standing. The Q2 report shed light on their financials and the margins expanded massively.
So far $FSLY margins expanded to 61.7% representing a 6.1% expansion in Fastly’s margins.
Furthermore, the overall earnings numbers were great. $FSLY delivered a strong beat with an EPS of $0.02 versus the expected $-0.01 EPS consensus. Not only that but Q2 revenue increased to $74.7 million representing a huge 62% YOY gain.
Digging further into the numbers $FSLY has unfortunately piled up a significant amount of debt. Currently, Fastly has $29.63 million of debt on its shoulders.
Secondly, news recently hit that Tik Tok makes up roughly 15% of Fastly’s revenue and given the current threat of being banned earnings and stock price could easily be affected in a negative connotation.
While that is a negative component to the companies financials management has worked to build a significant cash position.
As of 1/31/20 $FSLY had a $11.623 million cash position. Not only is their cash position strong but the projected earnings for Q3 were also increased.
Fastly raised guidance for Q3 and management is expecting $73.5 million to $75.5 million in revenue. For the full-year guidance was also raised and Fastly now expects full-year revenue to come through at $290 million to $300 million.
Moving on to the analysts the results are very bullish. Currently, the average price target is $91.29/share representing a 14.48% upside. Secondly, the high price target is $105.00/share and the low is $58.00/share.
The big money on the otherhand is not as bullish. Currently, only 43.60% of $FSLY is owned by institutions. Top holders include Abdiel Capital Advisors, American Century Investment, and Fidelity Investments Canada.
Getting into the technicals $FSLY took a major hit last week. The stock currently trades down from its 52/Wk high of $117/share and currently is sitting at $79.74/share.
Breaking down the six-month chart reveals a rebound off of the 50 day simple and exponential moving averages. If the rebound follows through a retest of the highs is possible, presenting an over 30% gain.
In short, I like the company and its potential. While there is a major risk like the large outstanding debt after a major pullback the future of projected growth makes it possibly a very profitable trade.
If you are looking to trade $FSLY now look likes the time to enter but I do recommend a close stop due to the historic volatility.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply opinion based on independent research.