Fastly plunges after revealing its biggest customer, TikTok owner ByteDance, spent less than expected in the third quarter, prompting several analyst downgrades.
Shares of Fastly plunged Thursday after the cloud platform provider said its biggest customer, TikTok owner ByteDance, spent less than predicted in the third quarter, and as analysts moved to downgrade their ratings on the stock.
Fastly shares were down more than 28% in premarket trading after the cloud-services company warned on Wednesday that third-quarter revenue will fall short of analysts’ forecasts. Fastly said it now expects revenue of between $70 million and $71 million, compared with previous guidance of at least $73.5 million.
The declines were exacerbated by downgrades from several analysts, including Baird’s William Power, who cut his recommendation to neutral from outperform and lowered his one-year price target to $85 from $105. Stifel analyst Brad Reback also downgraded Fastly to hold from buy and lowered his one-year price target to $77 from $98.
“Due to the impacts of the uncertain geopolitical environment, usage of Fastly’s platform by its previously disclosed largest customer did not meet expectations, resulting in a corresponding significant reduction in revenue from this customer,” Fastly said in a statement.
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Source: The Street