Fastly (FSLY) Valuation in Focus After Leadership Shakeup and Analyst Upgrade

Fastly (NYSE:FSLY) is making headlines as the company shakes up its top leadership, announcing Kip Compton as the new CEO and welcoming Richard Wong as CFO. This double appointment comes on the heels of an upgrade from Craig-Hallum, which points to stronger financial performance and encouraging signs in Fastly’s core markets. For investors, a new executive team during a corporate transformation is often a catalyst that sparks fresh attention and debate about the direction and value of the stock.

If you have been tracking Fastly lately, you’ll have noticed the market’s ambivalence. Shares are up more than 24% over the past year, a remarkable turnaround considering the stock has fallen nearly 21% year to date and trended downward over the past quarter. That’s a patchy path, but improved annual revenue growth and narrowing losses are fueling hope that changes at the top might finally translate into more consistent momentum.

With the leadership refresh and financial progress already reflected somewhat in the price, is Fastly a bargain waiting to be snapped up, or is the market already factoring in all the future upside?

Most Popular Narrative: 4.0% Undervalued

According to the most widely followed narrative, Fastly is considered modestly undervalued, with fair value sitting just above its current market price.

Ongoing adoption of advanced security solutions, including next-generation WAF, DDoS, and bot mitigation, positions Fastly to capitalize on rising enterprise demand for resilient edge security as cyber threats escalate. This supports future revenue growth and higher-margin service lines.

Curious what is fueling this bullish view? The calculation relies on bold expectations for growth, margin transformation, and a forward-looking profit multiple you might not expect from a company with recent losses. Wondering which assumptions push Fastly’s fair value above the current price? Dive in to uncover the numbers guiding these optimistic projections.

Result: Fair Value of $7.67 (UNDERVALUED)

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

However, persistent competition in core markets and reliance on a few major customers could quickly shift investor sentiment and challenge the optimistic outlook.

Find out about the key risks to this Fastly narrative.

Another View: SWS DCF Model

While the first approach suggests Fastly is modestly undervalued, our DCF model tells a different story. Using long-term cash flow projections, it indicates the stock may actually be trading above its fair value. Which assessment will prove closer to reality?

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

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Fastly for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Fastly Narrative

If you see things differently or want to dig deeper into the numbers yourself, you can craft your own narrative in just a few minutes. Do it your way.

A great starting point for your Fastly research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

Looking for More Investment Ideas?

Don’t let your investments miss a beat. Now is the perfect moment to broaden your horizons and seize new opportunities before others catch on.

• Spot undervalued gems with strong cash flow trends by checking out undervalued stocks based on cash flows to make sure you’re not overlooking promising bargains.
• Capture passive income and stability for your portfolio when you browse dividend stocks with yields > 3% for stocks with robust yields above 3%.
• Boost your exposure to powerful trends in artificial intelligence by scanning AI penny stocks featuring companies at the cutting edge of AI innovation.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com