Fastly Is Moving Fast, Is This The Best Tech Stock To Buy Now?
Fastly (FSLY Stock Report) is one of the popular tech stocks to watch today. As the name implies, the company’s business has something to do with speed. Fastly helps businesses speed up their internet traffic via content delivery network (CDN).
What’s a CDN? I am glad you asked. A CDN is a geographically distributed group of servers, which work together to provide fast Internet content delivery. While Fastly doesn’t have the brand recognition of big names like Google Cloud CDN or Amazon Cloudfront, it has made a name for itself. The company is currently benefiting from accelerating demand during the pandemic.
FSLY stock has surged around 80% in the past month. So why is it worth the attention now? The uptick in internet traffic is driving extra business for Fastly. What’s more, we might not be aware that we are benefiting from it. In such a situation, let’s figure out whether FSLY stock is one of the best tech stocks to buy in 2020.
Strategic Partnership With Larger Companies Signals Buying Opportunity For FSLY Stock
What caught many investors’ attention is that they are using Fastly’s services without realising it. That is not surprising, given that CDN services work behind the scenes. The company partnered with large companies such as Shopify, Yelp, Twitter, Spotify, New York Times, Airbnb and Vimeo. Impressed yet? All these companies have huge internet traffic on a daily basis.
If you have been following the market, Shopify is now the largest company in Canada. This came when more merchants are setting up their online stores amid the closure of their brick-and-mortar shops. Hence, this presents a big opportunity for Fastly to support the largest company in Canada.
From the list of tech companies under the partnership, the company has been helping to supercharge the response time and delivery of websites, photos, songs, applications etc.
Fastly Stock Benefited From The Coronavirus Pandemic. But Will That Last?
Fastly is delivering accelerating revenue growth during the pandemic. The growth came at no surprise. With stay-at-home orders in effect in many places, users are spending more time on their smartphones. The company’s recent earnings results give investors a glimpse of what the future could hold.
The first quarter recorded; $63 million in total revenue, an increase of 38% compared to the same period last year. The company also reported a 13% increase in their customer base. Its dollar based net expansion rate clocked in at 133%. Meaning that existing customers are spending more, another positive point to the company.
“As social distancing measures increased over the March period, we continue to see increased traffic across the internet and our platform, which certainly provides an additional boost to our results, but more than anything our first quarter results were driven by Fastly’s strong business fundamentals and the quality of our offerings, which we believe will continue to attract the best of the web. – Joshua Bixby, CEO of Fastly
Fastly’s management considers that its market opportunity is huge; around 35.8 billion by 2022. It is possible that the current fast pace growth will continue.
After all, we are adjusting our habits to the new normal amid the current pandemic. Nevertheless, since these estimates are from the management, investors should take these with little more than a grain of salt.
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Edge Computing Technology Empowered FSLY Stock
Fastly’s most attractive growth opportunities come from its edge computing solutions. The platform processes, serves, and secures your applications as close to the users as possible, to ensure that applications are fast and secure. Despite having fierce competition from Cloudflare (NET Stock Report), Akamai (AKAM Stock Report) and Microsoft (MSFT Stock Report), investors shall not be deterred from investing in FSLY stock. Having said that, small doesn’t mean it’s inferior. In fact, it could provide more innovative solutions with faster speed and flexibility compared to its larger rivals.
Considering the potentials of Fastly, I would not be surprised if there is an acquisition offer from larger rivals down the road. When that happens, there could be a possible breakout in FSLY stock prices.
What Are The Analysts Saying About FSLY Stock?
Analysts are optimistic about the future of Fastly. This is evident as many analysts raised their targets for FSLY stock and reiterate buy ratings. Personally, I believe that the momentum could persist for another quarter. which is highly likely. The question becomes, can Fastly will emerge as one of the best technology stocks to buy in the current quarter?