written by reader Large FSLY drop

By Bala, February 18, 2021

First time poster here.
The last 2 days saw Fastly drop a ton, but other than the sector being down, there doesn’t seem to be a good reason for the large drop. What would be a good entry point?

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Travis Johnson, Stock Gumshoe
February 19, 2021 12:50 am

The most immediate reason was their earnings report — which was excellent, but included a forecast that was less optimistic than analyst forecasts. You need a lot of optimism to justify paying 40X sales for any company, so the slightly dour sentiment brought the shares down a bit. Still at a historically ludicrous valuation (unprofitable, now more like 30X sales), but a little less wild than before.

If you want a buy price that makes logical sense here you’ll have to use relative valuation (NET, etc), technical analysis (200 day moving average, RSI, etc.), or, if you’re pretty certain of the company’s appeal, small buys whenever it dips and an iron stomach to handle the volatility.

When whole swathes of the market trade at valuations we’ve almost never seen before, there’s a lot of guessing involved. Whether the market decides to panic about growth stocks in general is likely to mean a lot more this year than Fastly’s operating performance. If the market’s happy paying 50X revenue for the best growth stocks who can grow revenues at 30-50% a year, FSLY should be fine… if the markets send these kinds of companies back down to 10X sales, which is how many of them were (or might have been) valued 2-3 years ago, it’s a long way down for a lot of market darlings.

More in the Friday File from me coming soon, but if other folks have thoughts on FSLY I’d like to hear them as well.

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john wick
john wick
February 19, 2021 3:38 pm

Hey travis not to destroy the thread but since I found you here today , do you know why both the all the 10x
motley fool threads were deleted? Cant click the link to any? Thanks a million for everything you do

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👍 72
February 19, 2021 7:04 pm
Reply to  john wick

Based on past experience with comments I know that usually threads get deleted if the site received a copyright claim. Highly likely that that’s what happened in the case of 10x threads too.

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john wick
john wick
February 20, 2021 2:23 am
Reply to  propmate

Found one. No copyright issues there I believe


Last edited 13 days ago by john wick
👍 72
February 25, 2021 2:12 pm


I’ve been reading postings since Tuesday on different sites that current market is down becuase of market correction.

It it correct? Could you please let me know if we had any information on what market correction mean and how it works?

Normally how long it goes? since it is third day in a row.

Thanks for all the info I get it here.

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Travis Johnson, Stock Gumshoe
February 25, 2021 2:36 pm
Reply to  prakad

Nobody knows. Either this is a little weakness as sentiment shifts and people become more aware of risks, a little blip that will be forgotten in six months, or it’s an indication that a 60% market drop is beginning. Or something in between.

There are often 10-15% “corrections” in the overall market, on average once every year or two… real sustained drops of 30-50% are much more rare, but do happen every 10-20 years or so. That’s for the broad market, the S&P 500 or an equivalent index. Almost any reasonably popular stock has the potential to fall dramatically on one piece of news, with no warning (20-50% or more), particularly these days with high trading volumes, record levels of margin trading, heavy option trading activity, and elevated volatility.

Anyone who tells you they know for sure what the future holds is as likely to be wrong as right, my base assumption is always that the market will continue to rise over time… but that there will be at least one more 50%+ drop in the next decade. Maybe it happens this year, maybe it happens in 2027, we don’t get to know that.

👍 17308
February 19, 2021 2:18 pm

stopped out at 80 for me . that was big gain that i got by SG uncovering FAZER last year. THANK YOU. Bulls bears get rich…what is a good reenter price? 50?

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February 20, 2021 5:41 am
Reply to  alejandraken

For unwavering believers in this beaten-down, currently-unloved stock, the visual aid provided by a candlestick chart might come in handy. I looked for FSLY’s lowest points in the past 6 weeks and also past 6 months, arriving at two possibilities for re-entry. To be clear, by lowest point I mean (literally) the lowest point of the candle for the selected day, usually lower than the closing price.

1) Lowest point since the start of January this year up to yesterday, Feb 19th = $80.00. I realize that your Stop Loss hit at this price, but the Feb 18th and 19th lows just happened to be exactly the same at $80. Oftentimes (but not always), the price of a stock starts turning upward after hitting such a “double bottom”. The extended trading session of Feb 19 seems to illustrate this tendency with a slight increase in price by 0.40%. Next week will prove this to be true or not.

2) Lowest points within the last 6 months = $62.20 to $62.60 which formed on Oct 30th-Nov 2nd, respectively. Not only was this a double bottom but a “rock bottom” as well, per the chart indicator known as Slow Stochastics. FSLY’s price came down to the lowest possible price (0%) within the company’s price range for the 6-month period Sept 2020 to Feb 2021; it had nowhere else to go but up from this point.

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February 21, 2021 1:05 pm
Reply to  bunion132

I really like the company so $60 as nee entry point makes a lot of sense. any routine market correction that is very likely scenario. Thanks for the chart work!

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