Analysts Slam Plummeting Fastly Stock with Bear Notes

The equity earned no fewer than six price-target cuts earlier

Digital Content Manager
Aug 5, 2021 at 10:51 AM
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Fastly Inc (NYSE:FSLY) is one of the worst stocks on the New York Stock Exchange (NYSE) today, down 21.3% at $35.05 at last check. This comes after the cloud software company reported adjusted second-quarter losses of 15 cents per share -- 2 cents short of estimates -- as well as a revenue miss. The company added June's widespread network outage will continue to impact results for the remainder of 2021.

In response, the equity received downgrades from D. A. Davidson and William Blair to "neutral" and "market perform," respectively. Plus, the brokerage bunch dished out at least six price-target cuts, including one to $30 from $45 from Stifel.

The equity has been chopping lower on the charts for much of the past 12 months, earlier hitting an annual low of $33.87. Long-term overhead pressure at the 100-day moving average has been keeping a tight lid on the shares since February, rejecting its July rally. Year-over-year, FSLY has shed 66.6%.

Although Fastly stock is on the short-sale restricted list today, shorts are cheering today's plummet. The 19.68 million shares sold short make up a whopping 19.1% of the equity's available float, or nearly a week's worth of pent-up buying power.

That bearish sentiment is echoed in the options pits. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio stands higher than 95% of readings from the past year. This means puts have been getting picked up at a faster-than-usual clip over the past two weeks.

Drilling down to today's options activity, 38,000 calls and 29,000 puts have crossed the tape so far, which is 10 times the intraday average. Most popular is the 8/6 20-strike put, followed by the 35-strike call in the same weekly series, with new positions being opened at both. 

Options look like a solid play at the moment, considering the security's Schaeffer's Volatility Scorecard (SVS) rating sits at 84 out of 100. This suggests the stock has exceeded these volatility expectations during the past year -- a boon for premium buyers.

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