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A dream time
Come easily, go easily. That’s the story of this year’s wild gyrations
Quickly
sections.
Content delivery network stocks spent the first weeks of the year ratcheting higher, building a 35% rally from late December until trading closed on Feb. 9. And since then, the stock has bounced back. in full, losing ground for six straight sessions, cutting the company’s valuation by 32% and trimming its market cap at around $ 3.8 billion.
A number of things have suddenly emerged. Last week, Fastly shares (ticker: FSLY) fell in sympathy with
Limelight Networks
(LLNW), a competitor in the CDN market that posted disappointing fourth-quarter results. The Limelight numbers raised concerns about price pressures in the content delivery market.
Things got worse on Thursday. After Wednesday’s close, it was Fastly’s turn to post fourth-quarter results. There were no apparent trends in the report. Revenue was $ 83 million, up 40% from a year earlier and slightly ahead of Wall Street analyst consensus at $ 82 million. On a non-GAAP basis, the company lost nine cents in installments, about a penny better than Street estimates.
In an interview with Barron’s on Wednesday, CEO Joshua Bixby said the results were “very real,” with security particularly higher than expected. And he said the concerns about CDN prices that surfaced last week were lost.
Inspectors’ perceptions of the numbers were very calm.
Raymond analyst James Robert Majek once again raised its Outperform rating, while raising its price target to $ 95 from $ 85. But Majek notes that investors were a little worried. about the company’s 2021 growth forecast, which seeks revenues of $ 375 million to $ 385 million. He estimates that the forecast includes about $ 30 million in revenue from the recently acquired Signal Sciences, a peripheral security services company. He says that means moderately rapid growth of around 20%, “which is likely to undermine near-term commitment for those who value the stock on the basis of revenue growth over the next 12 months. ”
Baird analyst William Power, who has a Neutral rating on the stock, says the full-year guidance was slightly lower than expected, noting that there was some confusion about both a donation from Signal Sciences and the donation rate from TikTok, which is not so long ago that the company had one largest customer.
Bixby said Barron’s that the company continues to see continued revenue from TikTok, which was in contrast to a previous understanding that the company lost all of that business – but the decision is a sham he didn’t make the numbers so amazing. If they were still serving TikTok, the thought goes, the results should be better.
Walter Pritchard of Citigroup confirmed his Sell rating on Fastly shares. It is noteworthy that the 40% growth rate was down from 42% a quarter earlier, and around pre-Covid levels – but adjusted for the Signal Sciences contract, it was closer to 30%. He added that “a new messenger looks anemic,” with fewer campaign customer invitations than a year ago and “much lower” customers. It also models growth, excluding construction, at around 20%, down from 42% in the third quarter and 30% a year ago. It raises its price target to $ 49 from $ 47, still far below its recent stock price.
On Thursday, shares of Fastly fell 15.5%, to $ 80.20. The
S&P 500
down 0.4%.
Write to Eric J. Savitz at [email protected]