Fastly
FSLY
$20.24
+4.17%
Fastly 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, it competes with larger providers like Cloudflare and Akamai by offering a programmable, high-performance platform favored by developers. The current investor narrative centers on Fastly's turnaround story, driven by accelerating revenue growth and expanding AI edge workloads, though concerns persist about profitability and slowing growth in its core network services business.…
FSLY
Fastly
$20.24
Related headlines
Investment Opinion: Should I buy FSLY Today?
Rating: Buy. Fastly is a turnaround growth stock with accelerating revenue, expanding margins, and a low valuation that offers asymmetric upside if the turnaround continues. The analyst consensus is buy with an average target of $24.40, implying 20.5% upside.
Supporting Evidence: Revenue growth accelerated to 19.8% YoY in Q1 2026 from 7.5% a year ago. Gross margin expanded to 62.5% from 53.2%. Free cash flow turned positive at $3.6M in Q1 and $54.7M TTM. The trailing PS of 2.4 is a 52% discount to the industry average of 5.0 and near historical lows. The forward PS of 1.46 suggests even more upside if revenue estimates are met.
Risks & Conditions: The biggest risks are a deceleration in revenue growth below 15% or failure to achieve positive net income within the next 12 months. This Buy would downgrade to Hold if revenue growth slows below 10% or if gross margins contract below 55%. Upgrade to Strong Buy if the company reports a profitable quarter or if the stock pulls back below $18 while fundamentals remain intact. Overall, Fastly appears undervalued relative to its growth trajectory and industry peers.
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FSLY 12-Month Price Forecast
Fastly's accelerating revenue growth, expanding margins, and positive free cash flow signal a successful turnaround, yet the stock trades at a deep discount to peers and its own history. The low PS multiple suggests the market is pricing in significant skepticism, which creates an asymmetric opportunity if the company delivers on its growth trajectory. The primary risk is execution: if growth stalls or profitability remains elusive, the stock could re-test lows. However, the current risk/reward is favorable for investors with a 12-month horizon, and we would upgrade to more bullish if the company reports a profitable quarter.
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 +20.6% versus the current price.
Average Target
$24.40
0 analysts
Implied Upside
+20.6%
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' (mean rating 2.33 on a 1-5 scale where 1 is strong buy). The average target price is $24.40, implying approximately 20.5% upside from the current price of $20.24. The distribution leans bullish, with no sell ratings, though several firms maintain neutral stances (e.g., Piper Sandler, Citigroup). The consensus reflects optimism about the turnaround, but the moderate upside suggests tempered expectations. The target range spans from $18.00 (low) to $32.00 (high), representing a 77.8% spread between low and high, indicating significant uncertainty. The high target of $32.00 assumes continued growth acceleration and margin expansion, potentially driven by AI edge workloads, while the low target of $18.00 prices in slower growth or competitive pressures. Recent ratings have been stable, with no upgrades or downgrades in the past three months, suggesting analysts are waiting for more data. The wide spread implies low conviction, which is typical for a company in transition with volatile earnings.
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Bulls vs Bears: FSLY Investment Factors
Fastly presents a compelling turnaround story with accelerating revenue growth, expanding gross margins, and positive free cash flow, all while trading at a significant discount to peers and its own history. The bull case is supported by a 19.8% YoY revenue acceleration, a 52% PS discount to the industry, and a consensus buy rating with 20.5% upside. However, the bear case highlights persistent unprofitability, competitive threats, and high uncertainty reflected in a wide analyst target range. The single most important tension is whether Fastly can sustain its growth acceleration and achieve profitability, which would validate the current low valuation and drive the stock toward the $32 high target, or if growth stalls, sending it back toward the $18 low target.
Bullish
- Revenue Growth Accelerating: Q1 2026 revenue grew 19.8% YoY to $173M, accelerating from 14.8% in Q4 2025 and 7.5% in Q1 2025, indicating strong momentum in edge computing and security.
- Gross Margin Expansion: Gross margin improved to 62.5% in Q1 2026 from 53.2% a year ago, driven by a mix shift toward higher-margin security and edge compute services.
- Positive Free Cash Flow: Fastly generated $3.6M in free cash flow in Q1 2026 and $54.7M TTM, a dramatic turnaround from -$14.3M in Q2 2024, showing improving cash generation.
- Low Valuation vs. Peers: Trailing PS ratio of 2.4 is a 52% discount to the software application industry average of 5.0, and near the bottom of its historical range (2.0-80+), suggesting upside if growth continues.
Bearish
- Still Unprofitable: Net loss of -$20.5M in Q1 2026, though improved from -$39.1M a year ago, and net margin of -11.9% shows the company is still not profitable.
- Core Network Services Growth Concerns: Despite overall acceleration, the core network services segment grew only modestly, and the stock plunged 14% on April 15, 2026, after Q1 results failed to ease growth concerns.
- High Volatility and Uncertainty: The 52-week range of $6.29-$34.82 and a 77.8% spread between analyst low ($18) and high ($32) targets indicate significant uncertainty and price risk.
- Negative ROE and Operating Margin: ROE of -13.1% and operating margin of -13.8% in Q1 2026 highlight ongoing operational inefficiencies and shareholder value destruction.
FSLY Technical Analysis
Fastly's 1-year price change of +180.3% reflects a powerful sustained uptrend, with the stock currently trading at $20.24, approximately 58% of its 52-week range ($6.29–$34.82). This positioning near the midpoint suggests the stock has recovered significantly from its lows but has not yet reclaimed its highs, indicating potential for further upside if momentum continues. The 52-week low of $6.29 and high of $34.82 provide a wide range, highlighting the stock's volatility and the dramatic recovery from its trough. Over the past 1 month, Fastly has gained 23.6%, while the 3-month change is -14.8%, showing a sharp divergence between short-term strength and intermediate-term weakness. This conflict suggests the stock may be experiencing a temporary pullback within a longer-term uptrend, as the 1-month surge could signal a reversal of the 3-month decline. The 1-month relative strength of +22.8% versus the S&P 500 indicates strong recent outperformance, but the 3-month relative strength of -18.3% confirms the broader downtrend over that period. The 52-week high of $34.82 acts as key resistance, while the 52-week low of $6.29 provides support. A breakout above $34.82 would signal a resumption of the uptrend and potential for new highs, while a breakdown below $6.29 would indicate a failure of the recovery and a return to bearish conditions. With a beta of 0.34, Fastly is significantly less volatile than the market, meaning its price swings are muted relative to the S&P 500, which may appeal to risk-averse investors but also limits upside participation in strong markets.
Beta
0.34
0.34x market volatility
Max Drawdown
-51.6%
Largest decline past year
52-Week Range
$6-$35
Price range past year
Annual Return
+180.3%
Cumulative gain past year
| Period | FSLY Return | S&P 500 |
|---|---|---|
| 1m | +23.6% | +1.4% |
| 3m | -14.8% | +3.3% |
| 6m | +117.9% | +6.3% |
| 1y | +180.3% | +16.0% |
| ytd | +98.6% | +8.4% |
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FSLY Fundamental Analysis
Fastly's revenue trajectory is accelerating, with Q1 2026 revenue of $173.0 million, up 19.8% year-over-year, compared to 14.8% growth in Q4 2025 and 7.5% in Q1 2025. The sequential improvement from $172.6 million in Q4 2025 to $173.0 million in Q1 2026 shows steady growth, driven by network services ($126.2 million) and security ($38.8 million) segments. This acceleration suggests the company is gaining traction with its edge computing and security offerings, though the core network services segment remains the primary revenue driver. The company remains unprofitable, with a net loss of -$20.5 million in Q1 2026, though this is an improvement from -$39.1 million in Q1 2025. Gross margin expanded to 62.5% in Q1 2026 from 53.2% in Q1 2025, indicating better cost management and mix shift toward higher-margin services. Operating margin improved to -13.8% from -26.4% a year ago, but the company still operates at a loss, with net margin of -11.9% in Q1 2026. Fastly has a healthy balance sheet with a current ratio of 2.61 and a debt-to-equity ratio of 0.46, indicating low financial risk. The company generated positive free cash flow of $3.6 million in Q1 2026, a significant improvement from -$14.3 million in Q2 2024, and trailing twelve-month free cash flow stands at $54.7 million. ROE is -13.1%, reflecting ongoing losses, but the improving cash flow and low debt levels suggest the company can fund operations without external financing.
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?
Since Fastly has negative net income, we use the price-to-sales (PS) ratio as the primary valuation metric. The trailing PS ratio is 2.40, while the forward PS ratio (based on estimated revenue of $1.02 billion) is approximately 1.46, implying the market expects significant revenue growth. The gap between trailing and forward PS suggests investors are pricing in future expansion, which aligns with the accelerating revenue trend. Compared to the software application industry average PS ratio of approximately 5.0 (based on typical sector data), Fastly's trailing PS of 2.40 represents a 52% discount. This discount may be justified by the company's lack of profitability and smaller scale relative to peers like Cloudflare (which trades at a higher PS). However, the forward PS of 1.46 is even more attractive, suggesting the market is not fully pricing in the growth acceleration. Historically, Fastly's PS ratio has ranged from a low of around 2.0 in late 2022 to a high of over 80 in mid-2021. The current PS of 2.40 is near the bottom of its historical range, indicating the stock is trading at a significant discount to its past valuation multiples. This low PS suggests either a value opportunity if the turnaround continues, or that the market has permanently re-rated the stock lower due to structural challenges.
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 & Operational Risks: Fastly remains unprofitable with a net loss of -$20.5M in Q1 2026, though improved from -$39.1M a year ago. The net margin of -11.9% and operating margin of -13.8% indicate that the company is still burning cash on operations, despite positive free cash flow of $3.6M in the quarter. The debt-to-equity ratio of 0.46 is manageable, but the negative ROE of -13.1% shows that the company is not generating returns on shareholder equity. Revenue concentration in network services ($126.2M of $173M) exposes the company to slowdowns in that segment, which has been a concern for investors.
Market & Competitive Risks: Fastly trades at a trailing PS of 2.4, a 52% discount to the software application industry average of 5.0, but this discount may reflect the market's skepticism about sustained growth and profitability. The stock has a beta of 0.34, indicating low correlation with the market, but its 1-year price change of +180.3% shows high idiosyncratic volatility. Competitive pressure from Cloudflare and Akamai, which have larger resources and customer bases, could limit Fastly's market share gains. Recent news on May 7, 2026, highlighted that record Q1 results failed to ease growth concerns, causing a sharp sell-off.
Worst-Case Scenario: If revenue growth decelerates back to single digits and the company fails to achieve profitability, the stock could retest its 52-week low of $6.29, representing a -69% decline from the current price of $20.24. This scenario could be triggered by competitive losses, a slowdown in AI edge workloads, or a broader tech downturn. The analyst low target of $18.00 implies a -11% downside, but the worst case could be more severe given the stock's history of volatility.
FAQ
The key risks include: 1) Financial risk: Fastly is still unprofitable with a net loss of -$20.5M in Q1 2026 and a net margin of -11.9%, though improving. 2) Competitive risk: Larger players like Cloudflare and Akamai have more resources and could pressure market share. 3) Growth risk: The core network services segment may slow, as evidenced by the stock's 14% drop on April 15, 2026, after Q1 results raised growth concerns. 4) Valuation risk: Despite a low PS, the stock is volatile (beta 0.34, 52-week range $6.29-$34.82) and could fall to the analyst low target of $18 or lower if growth disappoints. The most severe risk is a -69% decline to the 52-week low of $6.29.
The 12-month forecast is based on three scenarios: Bull case (30% probability) targets $28-$34, driven by sustained revenue growth above 20% and positive net income. Base case (45% probability) targets $22-$26, with growth stabilizing around 15-18% and gradual margin improvement. Bear case (25% probability) targets $16-$20, if growth decelerates to single digits or competitive pressures intensify. The analyst average target is $24.40, implying 20.5% upside from the current price of $20.24. The most likely scenario is the base case, assuming the company continues its turnaround but without major catalysts.
Fastly appears undervalued based on its price-to-sales ratio. The trailing PS of 2.4 is a 52% discount to the software application industry average of 5.0 and near the bottom of its historical range (2.0-80+). The forward PS of 1.46 is even more attractive, implying the market is not fully pricing in expected revenue growth. However, the low valuation is partly justified by the company's lack of profitability and competitive pressures. Compared to peers like Cloudflare (which trades at a higher PS), Fastly's discount reflects its smaller scale and higher risk. Overall, the valuation suggests the market is skeptical of the turnaround, creating potential upside if the company delivers.
Fastly offers a compelling risk/reward for growth-oriented investors. With revenue accelerating to 19.8% YoY, gross margins expanding to 62.5%, and a trailing PS ratio of 2.4 (a 52% discount to the industry average), the stock appears undervalued relative to its growth trajectory. Analyst consensus is buy with an average target of $24.40, implying 20.5% upside. However, the company is still unprofitable with a net loss of -$20.5M in Q1 2026, and the stock is highly volatile (52-week range $6.29-$34.82). It is a good buy for investors who believe in the turnaround story and can tolerate short-term volatility, but may not suit conservative or income-focused investors.
Fastly is better suited for long-term investors who can tolerate volatility and have a 2-3 year horizon, as the turnaround story requires time to play out. The stock has a beta of 0.34, indicating low market correlation, but its 1-year price change of +180.3% shows high idiosyncratic volatility. Short-term trading is risky due to sharp swings (e.g., 14% drop on April 15, 2026). The company does not pay a dividend, so returns depend on capital appreciation. For long-term investors, the low PS multiple and accelerating growth offer potential for significant upside if the company achieves profitability. A minimum holding period of 12-18 months is recommended to allow the turnaround to materialize.
