The Tech Stock That Could Double Your Money
The ongoing pandemic has kicked the digitalization era takeover into fifth gear and with technological companies bidding for users’ attention, fast and reliable content speed has never been so important. That is exactly what Fastly provides.
Its technology speeds up companies’ websites and apps by using edge computing that moves to process closer so that organizations can connect to the cloud faster.
The Bull Case
In quarter two of 2020, Fastly’s YoY sales increased by 62%. In the same quarter, the company’s earnings per share of $0.02 outperformed Wall Street’s prediction of an EPS loss of $0.01. In the past month alone, Fasty share price has gained almost 50%.
Since Fastly’s biggest customer, ByteDance’s TikTok, accounts for around 12% of its total revenue, the company has attracted a lot of investors. However, TikTok is not the only big name on their client list. Shopify, Spotify, Slack and Amazon all use Fastly, along with an impressive 114 new customers in their second quarter.
Fastly’s ability to speed up monitoring and programming IT systems will allow it to offer its products to other cloud infrastructure companies, as well as general IT and customer relationship management firms.
The pandemic increased sales for Fastly, with companies wanting to improve consumer experiences on their websites and apps, but what will happen to the stock price when the pandemic is behind us? In what is becoming a tech-dominant world, Fastly will still be a popular technology, even if a vaccine is found, as the tech sector is predicted to only pull back around 10–15%. Given that Fastly is still a relatively new company that has huge growth potential with its superior programming tools, its stock will likely rise well above any drawback experienced by lockdowns being lifted and people finally being able to entertain themselves outside of the house again.
It’s easy to see why the bulls are backing this stock, the company’s second-quarter revenue soared above $74 million, and in other positive news, Fastly acquired Signal Sciences for $775 million. The cybersecurity company will accelerate the growth of Fastly and enable it to offer a cybersecurity product as well.
The Bear Case for Fastly
The company did experience an 18% drop in stock price in August over fears that TikTok might be banned in the U.S. America being a dominant audience market for TikTok, coupled with the video-sharing app being Fastly’s biggest customer, has resulted in investors remaining focused on TikTok’s position stateside. A new deal on the table which would see Oracle and Walmart taking a joint 20% stake of TikTok may resolve worries around Fastly stock price and give the company the stability it deserves.