Fastly (FSLY): Assessing Valuation Following CTO Share Sale and Planned Move to Nasdaq

Fastly (FSLY) shares drew attention this week after its Chief Technology Officer sold a substantial block of shares. This coincided with the company’s decision to move its stock listing from the NYSE to Nasdaq this coming month.

See our latest analysis for Fastly.

Fastly's recent momentum has been hard to ignore, with the stock delivering a 40.6% share price gain over the past month and a 56.5% return over the last 90 days. While the high-profile executive share sale and exchange switch stirred some volatility, the longer-term total shareholder return remains positive at 18.1% for the year. However, the five-year total return is still deeply negative, reflecting both the company’s transformation efforts and the risks ahead.

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With Fastly's price rally and high-profile changes grabbing headlines, the critical question for investors is whether the recent excitement still leaves room for upside or if the market has already reflected all expected growth.

Most Popular Narrative: 11.9% Overvalued

At a recent closing price of $11.66, Fastly trades well above the most widely followed narrative’s fair value estimate of $10.42. This difference highlights stretched valuation expectations and sets the tone for discussion on the company’s future growth potential.

The acceleration of cloud migration and edge computing, combined with Fastly's increased product velocity (especially in Compute and adaptive observability analytics at the edge), expands the company's addressable market and supports durable multi-year revenue growth.

Read the complete narrative.

Fastly’s elevated pricing assumes a surge in future revenue, margin expansion, and operational leverage. But which catalyst tips the scale in this scenario? Behind this headline number is an ambitious growth plan and an earnings trajectory that many companies would seek. The underlying narrative depends on a key set of bold financial forecasts. Curious to see which assumptions drive that fair value?

Result: Fair Value of $10.42 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, continued pricing pressure in Fastly’s core CDN segment and dependency on a handful of large customers could present challenges to the optimistic outlook.

Find out about the key risks to this Fastly narrative.

Another View: What Does Our DCF Model Suggest?

While the earlier analysis relies on market multiples, the SWS DCF model offers a different perspective. According to this approach, Fastly appears overvalued at current levels, trading at $11.66 compared to our fair value estimate of $5.54. This raises the question of whether the market is factoring in too much optimism, or if there is unrecognized potential.

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Fastly Narrative

If you think there’s more to the story or would like to dive into the numbers yourself, you can quickly build your own view and see how it stacks up. Do it your way.

A great starting point for your Fastly research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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