Fastly Shares Drop On Rating Downgrade: Read To Know

RBC Capital analyst Rishi Jaluria downgraded Fastly, Inc FSLY to Underperform from Sector Perform with a price target of $9 (22% downside), down from $17.50.
The analyst attributed the downgrade to three primary reasons.
Firstly, the company's business is recession-prone due to its consumption-based model, high start-up exposure, lack of profitability, and the pricing-sensitive nature of CDN, Jaluria reasoned.
Secondly, its CEO position remains vacant, causing an unclear turnaround path and making it harder for Fastly to catch up with Cloudflare, Inc NET on the edge computing opportunity.
Thirdly, its security portfolio lags peers, with little likelihood for changes given the near-term lack of funding (low cash balance, unprofitable, and stock down materially).
Fastly will have to be more acquisitive to become a more serious contender in security, as per Jaluria.
Price Action: FSLY shares traded lower by 5.41% at $11.53 on the last check Tuesday.