FSLY sell off today was exacerbated by the reported stand off between the USA and China on the impending TikTok sale. Trump says he will shut down TikTok if no deal by Tuesday while China reportedly indicates it prefers a shut down to capitulation to the USA.
IT its recent CC, Fastly shared that 12% of its revenue comes from TikTok.
FSLY, a likely longer term winner in edge computing regardless of this outcome, is caught in the crossfire over this threat to shut down TikTok USA and today found its stock price tanking further over that issue, having already corrected over the possibility of losing business after a sale.
My view is that TikTok is not likely to be shut down because it is in neither countries’ interests.
What is not well known is that FSLY revenue exposure is less than half of what most stock watchers think. FSLY exposure is 12% to all of TikTok, but less than 6% to the USA operation.
But even if FSLY loses the entire USA account, the 5%-6% revenue loss is a blip that will be washed away in hypergrowth over a period of weeks, IMO.
My position in FSLY has been small until today because i was uneasy with the capability of the new CEO whom everyone else seems to find ideal.
But today i added on the pullback on grounds that my tech gurus like it position (Beth Kindig excepted) and most of all because of my growing comfort that the founder and Chairman is a first rate visionary and that he remains in an executive role. I see Bixby as a good front man and a good operator, which are things Artur Bergman prefers to delegate.
So it’s now a mid level holding for me, along with ZM, WIX and FVRR, CRM, and ADBE. My largest holdings continue to be LVGO and MSFT. Reduced position in AYX.