Fastly
FSLY
$24.95
+9.86%
Fastly, Inc. is a cloud computing company that provides an edge cloud platform for delivering, securing, and optimizing digital experiences, including content delivery, edge computing, and security services. As a niche player in the edge cloud market, Fastly differentiates itself through its programmable, developer-friendly platform that supports cloud-native and AI-driven workloads. The current investor narrative centers on the company's turnaround story, driven by strong revenue growth and AI-related opportunities, but tempered by concerns about slowing growth in its core network services and ongoing profitability challenges. Recent news highlights a stock plunge after record Q1 results failed to ease growth concerns, while earlier rallies were fueled by earnings turnaround and AI edge strategy optimism.…
FSLY
Fastly
$24.95
Related headlines
Investment Opinion: Should I buy FSLY Today?
Rating: Hold. The consensus is 'buy' with an average target of $27.00, but the modest 8.2% upside suggests limited near-term gains. The thesis is that Fastly is a turnaround story with improving margins and FCF, but profitability remains elusive, and growth deceleration is a concern. Supporting evidence includes 19.76% YoY revenue growth, gross margin expansion to 62.5%, positive FCF of $3.6M, and a PS ratio of 2.40 vs. industry 25.79. However, the forward PE of 42.73 and negative net margin of -19.5% temper enthusiasm. Key risks are growth deceleration, competition, and inability to achieve profitability. This Hold would upgrade to Buy if revenue growth accelerates above 25% and operating margin turns positive, or downgrade to Sell if growth falls below 15% and losses widen. The stock is fairly valued relative to its growth prospects, but not a bargain.
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FSLY 12-Month Price Forecast
The AI assessment is neutral with medium confidence. While Fastly's growth and margin improvements are positive, the high forward PE and limited analyst upside suggest the market is already pricing in a successful turnaround. The key factor is whether AI edge computing can drive sustained growth above 20%. If growth accelerates and profitability improves, the stance would upgrade to bullish; if growth decelerates or losses persist, it would downgrade to bearish.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Fastly's 12-month outlook, with a consensus price target around $27.00 and implied upside of +8.2% versus the current price.
Average Target
$27.00
0 analysts
Implied Upside
+8.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$20 - $32
Analyst target range
Fastly is covered by 10 analysts, with a consensus recommendation of 'buy' and a mean recommendation score of 2.33 (where 1 is strong buy and 5 is sell). The average target price is $27.00, implying an upside of 8.2% from the current price of $24.95. The target price range is $20.00 to $32.00, with the low target suggesting a potential downside of 19.8% and the high target implying a potential upside of 28.3%. The consensus leans bullish, but the relatively modest upside to the average target suggests that analysts see limited near-term upside. The wide range between the low and high targets indicates significant uncertainty about the company's future, likely due to the ongoing debate about growth sustainability and profitability. Recent institutional ratings have been mostly neutral or sector perform, with no major upgrades or downgrades, indicating a cautious stance among analysts. The high target of $32.00 likely assumes that Fastly can successfully execute on its AI edge computing strategy and achieve sustained revenue growth, while the low target of $20.00 may price in continued margin pressure and competitive challenges.
Bulls vs Bears: FSLY Investment Factors
Fastly presents a mixed picture: strong revenue growth, margin expansion, and positive FCF are countered by persistent losses and growth deceleration fears. The bull case is supported by improving fundamentals and a low PS ratio, while the bear case hinges on profitability and valuation concerns. Currently, the bull case has slightly stronger evidence given the accelerating revenue and margin improvements, but the key tension is whether the company can sustain growth above 20% while achieving profitability. If growth decelerates further, the stock could face significant downside; if AI edge computing drives acceleration, upside could be substantial.
Bullish
- Revenue growth accelerating: Q1 2026 revenue of $173.0M grew 19.76% YoY, up from 14.5% YoY in Q1 2025, indicating accelerating demand. Sequential growth from $172.6M in Q4 2025 to $173.0M in Q1 2026 shows continued momentum.
- Gross margin expansion: Gross margin improved to 62.5% in Q1 2026 from 53.2% in Q1 2025, a 930 basis point expansion. This reflects better cost management and scale benefits, driving operating leverage.
- Positive free cash flow: The company generated $3.6M in FCF in Q1 2026, a turnaround from negative FCF in prior quarters, and TTM FCF stands at $54.7M. This indicates improving cash generation and financial health.
- Undervalued on PS and PEG: PS ratio of 2.40 is a significant discount to the industry average of 25.79, and PEG ratio of 0.45 suggests undervaluation relative to growth. This implies the market is pricing in limited growth, providing upside potential.
Bearish
- Persistent unprofitability: Net loss of $20.5M in Q1 2026, though improved from $39.1M loss a year ago, still shows negative net margin of -19.5%. ROE is -13.1%, indicating continued shareholder value destruction.
- Growth deceleration concerns: Despite record Q1 results, the stock plunged 14% on May 7, 2026, as investors worried about slowing growth in core network services. Revenue growth of 19.76% is below the 20%+ levels seen earlier, raising sustainability questions.
- High valuation on forward PE: Forward PE of 42.73 implies the market expects significant earnings growth, but any miss could lead to multiple compression. This leaves little room for error in execution.
- Analyst target upside limited: Average analyst target of $27.00 implies only 8.2% upside from current price, with low target of $20.00 suggesting 19.8% downside. The modest upside reflects limited near-term catalysts.
FSLY Technical Analysis
Fastly's stock is in a strong uptrend over the past year, with a 1-year price change of +245.09%, significantly outperforming the S&P 500's +20.48% gain. The current price of $24.95 sits at 71.6% of its 52-week range (low of $7.055, high of $34.82), indicating the stock is trading in the upper half of its range, reflecting robust momentum but also potential overextension. The stock's beta of 0.36 suggests it is less volatile than the market, which is unusual for a high-growth tech stock and may indicate lower systematic risk. The 52-week low of $7.055 was likely set during a period of extreme pessimism, and the current price represents a significant recovery, but the stock remains well below its high of $34.82, suggesting there is still overhead resistance to overcome.
Beta
0.36
0.36x market volatility
Max Drawdown
-51.6%
Largest decline past year
52-Week Range
$7-$35
Price range past year
Annual Return
+245.1%
Cumulative gain past year
| Period | FSLY Return | S&P 500 |
|---|---|---|
| 1m | +21.9% | +3.6% |
| 3m | +52.9% | +2.7% |
| 6m | +38.0% | +11.4% |
| 1y | +245.1% | +18.7% |
| ytd | +144.8% | +12.3% |
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FSLY Fundamental Analysis
Fastly's revenue has been growing steadily, with Q1 2026 revenue of $173.0 million, up 19.76% year-over-year, and sequential growth from $172.6 million in Q4 2025 and $158.2 million in Q3 2025. The growth is driven by network services ($126.2 million) and security ($38.8 million), though the 'Other' segment is small at $8.0 million. While revenue growth is solid, it has decelerated from the 20%+ levels seen in earlier quarters, and the market has expressed concerns about slowing growth in the core network services business. The company remains unprofitable, with a net loss of $20.5 million in Q1 2026, though this is an improvement from the $39.1 million loss in Q1 2025. Gross margin improved to 62.5% in Q1 2026 from 53.2% in Q1 2025, indicating better cost management, but operating margin is still negative at -13.8%, reflecting ongoing investments in R&D and sales. The balance sheet is relatively healthy, with a current ratio of 2.61 and a debt-to-equity ratio of 0.46, and the company generated positive free cash flow of $3.6 million in Q1 2026, a turnaround from negative FCF in prior quarters. However, ROE is -13.1%, indicating that the company is still destroying shareholder value, and the negative net margin of -19.5% highlights the need for continued operational improvements.
Quarterly Revenue
$173021000.0B
2026-03
Revenue YoY Growth
+19.8%
YoY Comparison
Gross Margin
62.5%
Latest Quarter
Free Cash Flow
$54730000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is FSLY Overvalued?
Given that Fastly has negative trailing earnings (EPS of -$0.08), the price-to-sales (PS) ratio is the most appropriate valuation metric, as it allows for comparison despite the lack of profitability. The current PS ratio is 2.40, which is a significant discount to the industry average of 25.79 (based on historical data), suggesting the stock is trading at a substantial discount to its peers. However, this discount may be justified by Fastly's lower profitability and slower growth compared to some peers. The forward PE ratio of 42.73 indicates that the market expects earnings to turn positive in the future, and the PEG ratio of 0.45 suggests that the stock is undervalued relative to its expected growth. Historically, Fastly's PS ratio has ranged from 6.28 to 80.12 over the past few years, with the current level near the lower end of that range, indicating that the stock is trading at a historically low multiple. This could represent a value opportunity if the company can sustain its growth and achieve profitability, or it could reflect fundamental deterioration if the market's concerns about growth are justified.
PE
-12.3x
Latest Quarter
vs. Historical
N/A
5-Year PE Range 17x~59x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
-188.3x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks include persistent net losses, with Q1 2026 net loss of $20.5M and negative net margin of -19.5%, though improving. The company has a debt-to-equity ratio of 0.46, indicating moderate leverage, but its negative ROE of -13.1% shows it is not generating returns on equity. Cash burn has reduced, with positive FCF of $3.6M in Q1, but the company still relies on external funding for growth. Revenue concentration in network services (73% of Q1 revenue) exposes it to competitive pressures in that segment.
FAQ
The key risks are: 1) Financial risk: Persistent net losses, with a net loss of $20.5M in Q1 2026, and negative ROE of -13.1%, indicating ongoing value destruction. 2) Competitive risk: Intense competition from larger cloud providers like Cloudflare and Akamai, which could pressure growth and margins. 3) Macro risk: Economic slowdown could reduce IT spending, impacting revenue growth. 4) Company-specific risk: Growth deceleration in core network services, as highlighted by the stock's 14% drop in April 2026. The most severe risk is a prolonged period of unprofitability, which could lead to a re-rating lower.
The 12-month forecast is mixed. The bull case (30% probability) targets $30-$34, driven by AI edge computing acceleration. The base case (50% probability) targets $24-$28, assuming steady growth and margin improvement. The bear case (20% probability) targets $16-$20, if growth decelerates and losses persist. The most likely scenario is the base case, with the stock trading near the analyst average target of $27. Key assumptions include revenue growth around 20% and continued margin expansion. Investors should monitor quarterly results for signs of acceleration or deceleration.
FSLY is trading at a PS ratio of 2.40, which is a significant discount to the industry average of 25.79, suggesting it is undervalued on a sales basis. However, the forward PE of 42.73 indicates that the market expects strong future earnings, which could be overvalued if growth decelerates. The PEG ratio of 0.45 suggests undervaluation relative to growth, but this is based on analyst estimates that may be optimistic. Historically, the PS ratio has ranged from 6.28 to 80.12, so the current level is near the lower end, implying the market is pricing in limited growth. Overall, the stock appears fairly valued given its growth prospects, but not a clear bargain.
FSLY is a speculative buy for investors with a high risk tolerance. The stock offers a potential upside of 8.2% to the average analyst target of $27, but the low target of $20 implies a 19.8% downside. The company is growing revenue at 19.76% YoY and improving margins, but it remains unprofitable with a net margin of -19.5%. The PS ratio of 2.40 is a discount to the industry average, but the forward PE of 42.73 suggests high expectations. It could be a good buy if you believe in the AI edge computing story and can tolerate volatility, but it's not suitable for conservative investors.
FSLY is more suitable for long-term investment, given its growth stage and volatility. The stock has a beta of 0.36, indicating lower systematic risk, but it has experienced significant drawdowns, such as -51.6% over the past year. The company is investing in AI edge computing, which could drive long-term growth, but it is not yet profitable. Short-term trading is risky due to high volatility and sensitivity to earnings reports. A minimum holding period of 3-5 years is recommended to allow the turnaround to play out and for AI opportunities to materialize. Investors should be prepared for significant price swings.