FSLY

Why Fastly Stock Is Crashing Today

Fastly (NYSE: FSLY) stock is getting crushed in Thursday's trading. The content delivery network company's share price was down 30% as of 3 p.m. ET, according to data from S&P Global Market Intelligence.

Fastly published its fourth-quarter report after the market closed Wednesday, posting a beat on earnings but sales that fell significantly short of the market's expectations. Making matters worse, the company's guidance raised red flags -- and its chief architect sold shares.

Fastly's earnings beat wasn't enough for investors

Fastly posted non-GAAP (adjusted) earnings of $0.01 per share on revenue of $137.77 million. While the company's adjusted earnings came in significantly better than the average analyst's call for a loss of $0.02 per share, revenue missed Wall Street's consensus target of roughly $140 million.

Bearish sentiment surges after guidance and insider selling

For the first quarter, Fastly is guiding for sales of between $131 million and $135 million. The average analyst estimate's call for sales of $136.36 million in the period already signaled that Wall Street expected a moderate sales decline on a sequential basis, but the projected drop was worse than anticipated. Meanwhile, the company guided for an adjusted loss per share of between $0.05 and $0.09 -- substantially worse than the average Wall Street prediction of a per-share loss of $0.03.

For the year, Fastly is guiding for sales of between $580 million and $590 million -- and the midpoint of that guidance range falls short of the average analyst expectation of roughly $587.1 million. On earnings, management's guidance calls for a performance somewhere between losing $0.06 per share and breaking even. Wall Street had broadly expected the company to guide for a breakeven performance in 2024.

Adding to the sting of the disappointing guidance, filings that Fastly made with the Securities and Exchange Commission revealed that Chief Architect Artur Bergman sold 21,875 shares of company stock worth roughly $551,000 on Feb. 12. For context, Bergman (formerly the CEO) still owned roughly 6.05 million shares of Fastly following those transactions.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Fastly. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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