Fastly (FSLY) Stock Forecast & Price Target

Fastly demonstrated strong customer diversification with its non-top 10 customer revenue growing by 16% year-over-year, signaling a broadening revenue base. The company added 20 enterprise customers in the most recent quarter, while its packaged sales increased by over 60% year-over-year, showcasing robust demand for its offerings. Additionally, Fastly's focus on improving margins and enhancing its competitive edge in security solutions has resulted in an acceleration of organic growth, with a year-over-year increase of 17% in segment growth excluding true-up impacts.

Fastly is experiencing increased selling and marketing expenditures alongside expanding international network capacity, contributing to an anticipated lower margin in 2025 and continuing cash burn. The company’s reliance on a small number of significant clients, such as TikTok, raises concerns about customer concentration and its potential volatility on revenue growth, as evidenced by the decline in net revenue retention to 102%. Additionally, Fastly's consumption-based model and ongoing lack of profitability position it poorly against economic downturns, limiting its ability to effectively pursue opportunities in the security sector and diversify its revenue streams.