Fastly Inc. (FSLY-N)

Very skewed to edge computing. Biggest problem is it's trying its best to be profitable. Reporting well, revenues are sort of in line. Cut guidance on May 1. Write some calls to try to recoup some money. Don't buy here.

The last few quarters were not good. Maybe another company will take them over.

Momentum is strong, cash burn is slowing down, profitability HAS improved, and revenue growth remains resilient. In 2024-Q3, net retention rate went down to 114% compared to 116% in the 2024-Q2, but overall above 100% is still considered very solid. FSLY is expected to continue growing its topline around 15% over the next few years, and achive EBIT positive in FY2025. We think FSLY is the type of name that would perform well in this market environment. We would be conscious of position size and would consider it risky, but it may still have room to move higher. The balance sheet has improved and is now in good shape also. 
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FSLY is up 96% YTD, and down 16% for 52-weeks.
Its losses, negative cash flow and loss of market share were concerns in the past 18 months.
It has about $150M net debt, sales of $500M expected this year and negative cash flow of $70M last year.
Sales are still growing, but at a slower pace.
The fundamentals are still not that great. But the last quarter was better than expected. 4Q sales and gross margins beat estimates as it continues to do a good job of expanding business within existing accounts, reflected in a 4Q dollar-based net retention rate of 123% vs. 122% in 3Q.
Guidance for 2023 revenue growth is 15.6% at the midpoint, mostly through selling more into existing accounts and to a lesser degree from share gains.
Security is the main growth engine, with Fastly looking to expand in this market by building on web-protection technology acquired through the Signal Sciences deal.
The company also has ambitious plans to expand its margins, with a goal to approach a 60% adjusted gross margin by year-end. It will do this largely through more efficient use of bandwidth, which represents one-third of its costs.
It is a very high beta name, and will need a strong tech market to continue to perform well.
Based on recent momentum we would be OK holding it for three to six months, in anticipation of peak US interest rates and a general market recovery. 
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He likes it, but it's caught up in the Zoom-Peloton trade. It's a high-multiple stock, but he wouldn't sell it. It has room to run, maybe not all the way back to previous highs.

An essential 5G play The next-gen content delivery network to help. The stock was cut in half last October when Trump cracked down on Fastly's biggest customer, TikTok. Things will likely change under Biden. Even without TikTok exposure, it's still worth buying. Time to take it out of the penalty box.