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Fastly stock plunges after forecast calls for bigger 2022 growth slowdown than expected

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Fastly Inc. shares plunged between 20% and 25% in after-hours trading Wednesday, after the cloud-software company predicted 2022 revenue growth would slow down more than analysts expected.

Fastly
FSLY,
-1.93%
,
a software company that helps post content online, reported a fourth-quarter loss $57.5 million, or 49 cents a share, on sales of $97.7 million, up from $82.6 million a year ago. After adjusting for stock compensation and other costs, the company reported a loss of 10 cents a share, a worse performance than the loss of 9 cents a share in the holiday quarter last year.

Analysts on average expected an adjusted loss of 16 cents a share on sales of $92.5 million, after executives forecast a loss of 16 cents to 19 cents a share on sales of $90 million to $93 million. Shares still plummeted to less than $23 in after-hours trading after closing at $28.93, however, as the company predicted growth would slow down in 2022.

Fastly predicted full-year adjusted losses of 50 cents to 60 cents a share in 2022, along with revenue of $400 million to $410 million. Analysts on average were predicting adjusted losses of 49 cents a share on sales of $417.2 million, according to FactSet. At the midpoint of the 2022 guidance range, Fastly sales would grow 14.3%, after growing 21.8% in 2021 to $354.3 million.

Fastly stock has made a habit of huge declines after earnings. The stock declined after quarterly earnings for five straight quarters — with four of those declines by double-digit percentages — until it broke that streak with last quarter’s report, rising 2% the next day.

Fastly shares are higher than the $16 price commanded in the company’s 2019 initial public offering, but well off the heights that followed its public debut. The stock is down more than 70% in the past year before any post-earnings decline is factored in, while the S&P 500
SPX,
+0.09%

is up 13.7% in the past 12 months.

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