FSLY · Fastly
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $21.04
Note written ·
Price against the kill line
21.0% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $21.04, on record since 11 November 2026. The shares are down 42.8% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $21.04, the 4 November 2026 close before the Q3 results, which would erase the post-report decline and show the shares leading. A fourth-quarter revenue result above the $202 million top of the guide would also point that way.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 4 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 190
- Revenue, change on a year (%)
- +20.2
- Gross margin (%)
- 63.3
- Operating margin (%)
- −5.9
- Free cash flow, four quarters ($M)
- 56.8
- Net cash, cash less debt ($M)
- 40.9
- Enterprise value to sales (×)
- 3.7
- Free-cash-flow yield (%)
- 2.1
All filed numbers
What Fastly reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 190 | +20.2 | 63.3 | −5.9 |
| first filed | 183 | +23.3 | 63.3 | −7.9 |
| first filed | 173 | +19.8 | 62.5 | −13.8 |
| first filed | 173 | +22.8 | 61.4 | −8.7 |
| first filed | 158 | +15.3 | 58.4 | −18.2 |
| first filed | 149 | +12.3 | 54.5 | −24.8 |
| Pre-tax income ($M) | −11.7 |
| Net income ($M) four quarters: −62.9 | −11.3 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +8.0 |
| Operating cash flow ($M) | 131 |
| Capital spending ($M) | 73.8 |
| Free cash flow ($M) | 56.8 |
| Cash and short-term investments ($M) | 365 |
| Debt ($M) non-current long-term debt plus current maturities | 324 |
| Net cash, cash less debt ($M) | 40.9 |
| Deferred revenue ($M) −11.8% on a year | 35.3 |
| Backlog, orders not yet delivered ($M) +24.4% on a year | 334 |
| Receivables ($M) | 115 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 1,004 |
| Market value ($M) | 2,679 |
| Enterprise value, market value plus net debt ($M) | 2,638 |
| Enterprise value to sales (×) | 3.7 |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 2.7 |
| Free-cash-flow yield (%) | 2.1 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 12.8% of shares outstanding sold short, 3.7 days of average trading to cover, −2.9% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $35.5M |
| 12 monthsfrom | $0 | $88.6M |
The thesis
Fastly's business is performing better than its shares, and the shares are more likely to lag the S&P 500 over the next three months. Q3 revenue and guidance both beat, yet the stock fell after the report for the third quarter in a row. The Q4 and full-year report, expected around February 2027, settles whether growth holds near 20% or slows toward the mid-teens that analysts expect.
Fastly reported Q3 revenue of $190.2 million on 4 November 2026, up 20.2% year over year against a consensus of about $187.8 million (Benzinga, StockStory). Adjusted earnings per share were $0.17 against $0.12 expected. The shares closed at $15.38 on 5 November 2026, the first session after the report, and at $17.26 on 11 November 2026. That is 50.4% below the 52-week intraday high of $34.82 set on 8 April 2026, and the three-month change is −42.5%.
The price already reflects slower growth: sell-side estimates call for 14.9% growth over the next 12 months (StockStory), against 20.2% in Q3.
Bullish and bearish views on Fastly, Inc.
The bull case on Fastly, Inc. (FSLY), in brief: revenue and guidance both beat. The bear case: good results have not lifted the shares.
Bull case
- Revenue and guidance both beat. Q3 revenue of $190.2 million topped the consensus of about $187.8 million. Fastly raised FY2026 revenue guidance to $744 million–$748 million from $732 million–$746 million (Benzinga, 4 November 2026).
- Security is growing faster than the whole. Security revenue rose 32% to $44.7 million in Q3, and trailing net retention reached 119% (earnings-call summaries, 4 November 2026).
- Cash conversion improved. StockStory reported a Q3 free-cash-flow margin of 13.2%, up from 1.9% in Q2, and call summaries put free cash flow at $25 million, the seventh straight positive quarter.
- Q4 guidance sits above estimates. Fastly guided Q4 revenue to $198 million–$202 million against an estimate of $196.9 million, and adjusted EPS to $0.16–$0.18 against $0.13 (Benzinga, 4 November 2026).
- Some analysts still carry high targets. Freedom Broker maintained Buy and lowered its target to $35 on 9 November 2026. Citigroup lowered its target to $25 with a Neutral rating on 6 November 2026.
Bear case
- Good results have not lifted the shares. Yahoo Finance reported on 5 November 2026 that Fastly stock fell after each of its last three earnings reports despite beats, and was down 41% over the past month at $15.32 in afternoon trading.
- Growth is decelerating. StockStory calculates that the Q4 guidance midpoint implies about 15.9% growth, down from 20.2% in Q3.
- Targets are being cut. On 5 November 2026 RBC cut its target to $19 (Sector Perform), Piper Sandler to $24 (Neutral) and Evercore ISI to $24 (Outperform). All sit above the $17.26 close of 11 November 2026.
- Insiders have been selling. SEC Form 4 filings show open-market sales under Rule 10b5-1 plans (pre-arranged selling schedules) by Chief Technology Officer Artur Bergman, including 379,602 shares at an average of $30.16 on 23 September 2026. CEO Charles Compton Lacey III sold 8,941 shares at $24.98 on 26 October 2026. The itemised filings show no open-market purchases.
- Sales leadership is in transition. Scott Lovett, president of go-to-market, plans to retire in 2027, and the company is searching for a chief revenue officer (call summaries, 4 November 2026). No successor has been named in the sources reviewed.
- The AI security products show no reported revenue. AI Runtime, AI Firewall and API Enforcement reached general availability in September 2026. Per 24/7 Wall St on 9 October 2026, they had not yet added revenue.
Price setup
The shares closed at $15.38 on 5 November 2026, $15.85 on 6 November 2026, $15.98 on 9 November 2026, $16.24 on 10 November 2026 and $17.26 on 11 November 2026. Each close since the report has been higher than the one before, from a level near the $15.32 afternoon low Yahoo Finance reported on 5 November 2026.
The last close is below both the 50-day average of $23.62 and the 200-day average of $21.81. The 52-week closing low is $7.96 on 5 February 2026; the 52-week intraday high is $34.82 on 8 April 2026. Oppenheimer upgraded the shares to Outperform with a $35 target on 9 October 2026, when the close was $29.30 (published note, adjusted closes).
The shares have lost about half of their peak value since April. The nearest overhead references are the two moving averages, and a move above both would be the first sign that buyers have returned.
Catalysts ahead
- ~February 2027 (est.): Fastly Q4 and full-year 2026 report (date unconfirmed). Tests the $198 million–$202 million Q4 revenue guidance and the $744 million–$748 million full-year range, and shows whether growth holds near 20% or slows toward the mid-teens.
What would change the view
A daily close above $21.04, the 4 November 2026 close before the Q3 results, which would erase the post-report decline and show the shares leading. A fourth-quarter revenue result above the $202 million top of the guide would also point that way.
What it trades with
Fastly trades with small and mid-cap software and with Cybersecurity names more than with the broad index. Its reaction to the 5 August 2026 and 4 November 2026 reports, both beats followed by declines, was specific to the company. Customer concentration is a shared exposure: the finsee.ai review puts the ten largest customers at 39% of Q3 revenue, up from 37% in Q2 (date unconfirmed).
The evidence, claim by claim (8)
- Fastly reported Q3 2026 revenue of $190.2 million, up 20.2% year over year, against a consensus of about $187.8 million; adjusted EPS was $0.17 against $0.12 expected. Benzinga; Yahoo Finance/StockStory, 4 November 2026 · as of
- Fastly raised FY2026 revenue guidance to $744M–$748M from $732M–$746M and adjusted EPS guidance to $0.61–$0.63 from $0.50–$0.54. Benzinga, 4 November 2026 · as of
- Fastly guided Q4 2026 revenue to $198M–$202M against an estimate of $196.9M, and adjusted EPS to $0.16–$0.18 against $0.13. Benzinga, 4 November 2026 · as of
- Q3 free-cash-flow margin was 13.2%, up from 1.9% in Q2. Yahoo Finance/StockStory, 4 November 2026 · as of
- Fastly stock fell after each of its last three earnings reports despite beats, and was down 41% over the past month at $15.32 in afternoon trading. Yahoo Finance, 5 November 2026 · as of
- RBC cut its Fastly target to $19 (Sector Perform); Piper Sandler to $24 (Neutral); Evercore ISI to $24 (Outperform). Benzinga analyst-action headlines, 5 November 2026 · as of
- Citigroup maintained Neutral and lowered its target to $25; Freedom Broker maintained Buy and lowered its target to $35 on 9 November 2026. Benzinga analyst-action headlines, 6 November 2026 and 9 November 2026 · as of
- CTO Artur Bergman sold 379,602 shares at an average $30.16 on 23 September 2026 under a Rule 10b5-1 plan; CEO Charles Compton Lacey III sold 8,941 shares at $24.98 on 26 October 2026 under a Rule 10b5-1 plan. SEC Form 4 filings, 25 September 2026 and 28 October 2026 · as of
Sources
- Fastly Reports Double Beat, Raises Guidance, Shares Fall: What Investors Should Know · benzinga.com
- Fastly (NASDAQ:FSLY) beats Q3 2026 sales expectations but stock drops 13% · finance.yahoo.com ·
- Fastly Just Dropped 41% in a Month: Is FSLY Stock Dead Money or Due for a Bounce? · finance.yahoo.com
- Fastly beats and raises for a third straight time but growth is narrowing toward its largest customers · finviz.com
- Fastly (NASDAQ:FSLY) Shares Gap Down · marketbeat.com ·
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