stocknovice wrote, in part:
Update – FSLY has an intriguing new product in beta. As I am waiting for that to hopefully kick in, the company is now supporting itself with a core business at low-to-mid 40’s growth (using the new guide with a lesser beat). That’s a big drop off. The low enterprise growth and concentration might be more of a concern than I thought. If nothing else, it puts more pressure on Signal Sciences contributing immediately. Fixing this misstep will be handled by a new CEO and a former CEO who prefers the technical weeds instead. This isn’t a terrible thesis, but it is one with considerably more risk.
I think that’s a fair assessment. To pull from a post of mine back in Fastly’s glory days (early August): https://discussion.fool.com/let39s-start-by-clearing-things-up-i…
I’m actually not invested in Fastly for its CDN. Yes, it’s a great CDN and has advantages over other CDNs, especially on the push side, but Fastly’s CDN business alone is not going to provide the kind of high-growth that we look for here. The future for Fastly is Compute@Edge, which is still several months away from launch and the TikTok news has no bearing on that.
What we’ve seen is that the legacy, mostly commodity, CDN business isn’t growing like we had seen in Q2, but the company is making the right moves for its future edge computing business. Such moves such as acquiring Signal Sciences and just recently, hiring the entire Wasmtime team from Mozilla.
One thing no-one here has discussed (but it was mentioned in some reddit threads), is: What is the effect of the Wasmtime team acqui-hiring by Fastly on Cloudflare? Cloudflare has had WASM support for a while now. Here’s what Cloudflare said about WASM just a couple weeks ago:
WASM is closer to machine code, and thus faster than JavaScript (JS) or JIT. Compiler optimizations, already done ahead of time, reduce the overhead in fetching and parsing application code. Today, WASM offers the flexibility and portability of JS at the near-optimum performance of compiled machine code.
AI models have notoriously large memory usage demands because configuring them requires high parameter counts. Cloudflare already extends support for WASM using their Wrangler CLI, and we chose to use it for our exploration. https://blog.cloudflare.com/exploring-webassembly-ai-service…
Does this mean that Cloudflare will de-emphasize support for WASM? They’ve always touted their JavaScript support (since JS is probably the most popular programming language today), but since there are performance penalties Cloudflare has to offer alternatives. Is Fastly’s acquisition a business smart move as well as a way to get additional technical expertise and double-down on future performance advantages?
I do understand people trimming or selling out of Fastly completely. It makes sense, depending on your investment thesis and understanding of the technologies and especially in relation to other opportunities. Even Cramer the day of the pre-announcement said that Fastly was likely to decline much further, and was right. If you sold, congrats. If you didn’t sell, think about what your investment thesis is moving forward from here.