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Why Fastly Stock Tumbled Today

What happened

Shares of Fastly (NYSE: FSLY) fell Wednesday after an analyst at Citi initiated coverage of the cloud-computing company with a sell rating on the stock.

The tech company's stock price fell by as much as 6.9% and was down 4.5% at the end of the trading day.

So what

Citi analyst Tyler Radke started coverage of Fastly's stock with a $49 price target and the aforementioned sell rating. Radke is concerned that Fastly may not be able to grow its customer net additions as fast as it has in the past.

Image source: Getty Images.

Fastly's business has benefited from the pandemic as people have been spending more time at home and increasing their consumption of online content. Fastly's edge computing cloud platform helps accelerate websites, online video, and apps.

In light of that, the analyst also suggested that the next 12 months could be difficult for Fastly, as the widespread distribution of COVID-19 vaccines should allow people to largely return to their pre-pandemic normal behaviors.

Now what

Some investors are becoming concerned that in the coming years, technology companies won't grow as quickly as they did during the pandemic. Fastly stock is still up 229% from where it was 12 months ago, but investors have pushed the share price down 26% over the past six months. Long-term investors should remember to focus on the company's underlying business rather than trading stocks based on the day's news or analysts' notes.

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Fastly. The Motley Fool has a disclosure policy.


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