This week’s outage that temporarily shut a number of websites, including The New York Times and TheStreet, could lead some Fastly customers to go elsewhere, said Oppenheimer analyst Timothy Horan.
“Outages happen to all cloud companies, and Fastly responded rapidly and with candor, but switching costs for [content delivery networks] are relatively low, and customers could look for second-source providers,” he said.
The company “faces difficult comparisons on both revenue and margins,” he said.
Fastly recently traded at $53.90, down 1.4%. It’s still up 28% for the last month.
Horan said Fastly trades at more than 16 times forecast 2021 revenue, with negative Ebitda, according to Barron’s. It needs “strong growth and improving margins to expand this valuation.”
Fastly said Wednesday that a single company was responsible for the outage, when it changed its settings.
On Tuesday, one of Fastly’s customers pushed all the right buttons to prompt the bug that took down internet websites worldwide, it said.
The company also said it was deploying a bug fix across its network as "quickly and safely as possible." Fastly also says it is conducting a complete review of the processes and practices it followed during the outage.
"Even though there were specific conditions that triggered this outage, we should have anticipated it," the company said. "We apologize to our customers and those who rely on them for the outage and sincerely thank the community for its support."