Fastly
FSLY
$22.68
-12.87%
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 specialized player in the edge cloud market, Fastly differentiates itself through its programmable edge and real-time data processing capabilities, competing with larger cloud providers and CDN peers. The current investor narrative centers on the company's turnaround story, driven by AI-driven edge workloads and a recent earnings beat, yet tempered by concerns about growth deceleration in its core network services and ongoing profitability challenges. Recent headlines highlight a sharp stock plunge after Q1 results despite record revenue, reflecting investor skepticism about sustained growth, while earlier rallies were fueled by AI optimism and a strong Q4 earnings report.…
FSLY
Fastly
$22.68
Related headlines
Investment Opinion: Should I buy FSLY Today?
Rating: Hold. Fastly is a speculative turnaround play with improving fundamentals but significant execution risks. The analyst consensus is Buy with an average target of $24.40, implying 7.7% upside, which is modest. The thesis is that revenue acceleration and margin expansion will continue, but the market is already pricing in a lot of optimism.
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FSLY 12-Month Price Forecast
The AI assessment is neutral with medium confidence. Fastly's operational improvements are real, but the valuation already reflects a successful turnaround. The stock could outperform if AI edge adoption accelerates, but the risk of disappointment is high given the high forward PE. I would upgrade to bullish if revenue growth exceeds 20% and the company achieves positive EBITDA, and downgrade to bearish if growth falls below 15% or losses widen.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Fastly's 12-month outlook, with a consensus price target around $24.40 and implied upside of +7.6% versus the current price.
Average Target
$24.40
0 analysts
Implied Upside
+7.6%
vs. current price
Analyst Count
—
covering this stock
Price Range
$18 - $32
Analyst target range
Fastly is covered by 10 analysts, with a consensus recommendation of 'Buy' and a mean rating of 2.33 (where 1 is Strong Buy and 5 is Sell). The average price target is $24.40, implying a modest 7.7% upside from the current price of $22.66. The distribution shows a bullish tilt, with no Sell ratings and several Overweight/Neutral stances, but the recent downgrades from firms like RBC Capital and Piper Sandler to Neutral/Sector Perform suggest caution. The target range spans from $18.00 (low) to $32.00 (high), indicating a wide dispersion of expectations. The high target of $32.00 implies a 41.2% upside, likely assuming successful AI edge adoption and margin expansion, while the low target of $18.00 suggests a 20.6% downside, reflecting concerns about growth deceleration and competitive pressures. The wide spread highlights significant uncertainty about Fastly's ability to sustain its turnaround, with recent analyst actions showing a mix of reaffirmations and no major upgrades, pointing to a cautious optimism.
Bulls vs Bears: FSLY Investment Factors
Fastly presents a classic turnaround story with accelerating revenue, expanding margins, and narrowing losses, but the market remains skeptical about the sustainability of growth and the path to profitability. The bull case is supported by strong fundamental improvements and a historically low PS ratio, while the bear case is anchored on persistent losses, high forward valuation, and competitive threats. Currently, the evidence slightly favors the bulls given the clear operational momentum, but the stock's volatility and the recent post-earnings plunge underscore the fragility of investor confidence. The key tension is whether the growth acceleration can be maintained and translate into sustained profitability, which would justify the current valuation and drive further upside.
Bullish
- Revenue growth accelerating: Q1 2026 revenue grew 19.8% YoY to $173.0M, up from 17.2% in Q4 2025 and 6.4% in Q3 2025, showing a clear acceleration trend. This suggests the company is gaining traction, particularly in AI-driven edge workloads.
- Gross margin expansion: Gross margin improved to 62.5% in Q1 2026 from 51.3% in Q2 2025, reflecting a shift toward higher-margin services and better cost management. This is a key driver for potential profitability.
- Narrowing losses and positive EBITDA: Net loss narrowed to $20.5M in Q1 2026 from $37.5M in Q2 2025, and EBITDA turned positive at $10.7M in Q4 2025. This indicates improving operating leverage and a path to profitability.
- Attractive valuation vs. history: PS ratio of 2.4x is near the bottom of its historical range (6.3x to 80.1x), suggesting the market is pricing in a pessimistic scenario. If the turnaround sustains, there is significant re-rating potential.
Bearish
- Growth concerns persist: Despite record Q1 revenue, the stock plunged 14% on May 7, 2026, as investors worried about slowing growth in the core Network Services segment. The market is skeptical about sustained acceleration.
- Still unprofitable: Net loss of $20.5M in Q1 2026, though narrowed, means the company is still burning cash. The forward PE of 57.2x implies high expectations for future profitability, which may not materialize quickly.
- High valuation on forward earnings: Forward PE of 57.2x is steep for a company with negative net income and a history of losses. This leaves little room for error, and any miss could trigger a sharp de-rating.
- Competitive pressure from giants: Fastly competes with larger players like Cloudflare, Akamai, and hyperscalers (AWS, Google). These competitors have more resources and can undercut on price, threatening Fastly's market share.
FSLY Technical Analysis
Fastly's stock has exhibited a dramatic recovery over the past year, with a 1-year price change of +233.7%, though the path has been volatile. The current price of $22.66 sits at 58.6% of the 52-week range (between $6.29 low and $34.82 high), indicating a mid-range position after a significant rally from lows. This suggests the stock is in a recovery phase, having rebounded strongly from its 52-week low but still below its peak, reflecting both momentum and lingering overhead supply. The 6-month change of +145.0% underscores a powerful uptrend, but the stock's beta of 0.343 indicates lower volatility than the market, which is unusual for a high-growth tech name and may signal a more stable, institutionally-held profile.
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
+247.9%
Cumulative gain past year
| Period | FSLY Return | S&P 500 |
|---|---|---|
| 1m | +22.0% | +2.8% |
| 3m | +10.6% | +4.2% |
| 6m | +164.6% | +11.3% |
| 1y | +247.9% | +21.5% |
| ytd | +122.6% | +12.7% |
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FSLY Fundamental Analysis
Fastly's revenue trajectory shows robust growth, with Q1 2026 revenue of $173.0 million, up 19.8% year-over-year, accelerating from the 17.2% growth in Q4 2025 and 6.4% in Q3 2025. The sequential improvement from $148.7 million in Q2 2025 to $173.0 million in Q1 2026 indicates a clear acceleration, driven by strength in Network Services ($126.2 million) and Security ($38.8 million) segments. However, the company remains unprofitable, with a net loss of $20.5 million in Q1 2026, though this loss narrowed significantly from $37.5 million in Q2 2025, reflecting improving operating leverage. Gross margin expanded to 62.5% in Q1 2026 from 51.3% in Q2 2025, indicating successful cost management and a shift toward higher-margin services.
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 Fastly's negative net income (TTM EPS of -$0.08), the appropriate valuation metric is the price-to-sales (PS) ratio, which stands at 2.4x trailing, while the forward PE is 57.2x, implying the market expects a return to profitability. The PS ratio of 2.4x is significantly below the industry average for software companies, which typically trade at 5-10x sales, suggesting a discount that may reflect the company's historical losses and growth concerns. Compared to its own historical PS range, which peaked at 80.1x in Q2 2021 and has been as low as 6.3x in Q1 2025, the current 2.4x is near the bottom, indicating the market is pricing in a pessimistic scenario, potentially offering value if the turnaround sustains.
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 are significant: Fastly has a history of net losses, with a TTM net margin of -19.5% and an operating margin of -18.9%. While losses are narrowing, the company still burned $20.5M in Q1 2026, and its debt-to-equity ratio of 0.46 indicates moderate leverage. The positive free cash flow of $54.7M TTM is a bright spot, but it may be volatile. Revenue concentration in Network Services (73% of Q1 revenue) exposes the company to shifts in that segment. If growth decelerates again, the high forward PE of 57.2x could compress sharply, leading to a significant de-rating.