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Fastly Is Getting Buried on Earnings - Is It a Buying Opportunity?

Fastly is getting crushed on earnings, hitting new lows for 2021. Is the bottom close? Let's look at the charts, even if they don't look promising.

Fastly  (FSLY) - Get Fastly Inc. Class A Report was getting decimated, down more than 20% on the day, after reporting first-quarter earnings.

Anyone who has followed this stock from its pre-coronavirus days - like me - knows it’s been a volatile ride. That being said, the market was taken off-guard by the company’s quarterly update.

The company reported in-line revenue and missed earnings expectations. Guidance for next quarter didn’t do it any favors, while Fastly also announced the departure of its chief financial officer.

Wall Street doesn’t like when CFOs depart, particularly when the stocks are caught in a nasty bear market like growth stocks currently are.

Aside from being down big from the highs, we know the group is in a bear market because investors are selling good stocks after quality reports.

Etsy  (ETSY) - Get Etsy Inc. Report is one example, down about 15% so far on the day. Apple  (AAPL) - Get Apple Inc. Report and others have been sold despite strong results too.

In any regard, those that follow Fastly knew that the first two quarters of this year weren’t going to wow anybody. 

It’s the back-half of the year that we are watching and management’s better-than-expected full-year guidance reassures us about its future.

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But no one seems to be talking that. Instead, the CFO news was a curveball and Fastly stock is paying the price.

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Trading Fastly

Daily chart of Fastly stock.

Daily chart of Fastly stock.

There has been some ugly price action in Fastly, even though the stock rallied well over 1,000% from its March 2020 low to the 52-week high.

After suffering a brutal gap-down in October, then another painful slide in February, shares came into the report down 575% from the 52-week highs and 52.7% from the 2021 highs.

Despite that, the worst was clearly not priced in, as Fastly shares are being buried on the day.

The move sent Fastly stock gapping below the $50 mark, as well as the 100-week moving average.

If shares can recover and close above $46, I will feel a little better about Fastly going forward. Above $50 and perhaps we can call a bottom and look for a gap-fill back up toward $58.

However, if sellers continue to pour on the pain, $38 to $40 isn’t out the question at this point.