Here’s what I did about Fastly. I’m sure that plenty of you will disagree with me, and I acknowledge that I may be dead wrong, but here’s what I did, and why!
Please remember that I’m not a techie. I’m just going on common sense, and here were my reasons: I still think that the key thing is that Fastly added 7 enterprise customers last quarter and Cloudflare added 80 in the same quarter. That tells the whole story. Simple and easy beats “better tech” but complicated and harder to implement. Fastly’s bump in growth to 62% last quarter came just from increased usage by their existing customers, due to the sudden work from home (WFH). They even told us that usage wouldn’t be growing like that in this quarter but we thought they were sandbagging. We were wrong!
Their customers are all the big, technically sophisticated companies that have a lot of developers on staff (who can figure out the unusual computer language that Fastly chose to use), but they don’t seem to be able to sign up the rest of the world, which is not technologically prepared for complicated, and which Cloudflare is gobbling up. And Cloudflare has a two year headstart on the compute at the edge, while Fastly is still in beta, and Cloudflare seems to be barreling into other new areas as well.
I sold my entire Fastly position and put most of it into Cloudflare, which was down 7% to 10% for NO REASON at all. Their revenue isn’t based on usage. They maintained 48% growth last quarter, the same as what they had the quarter before, when Fastly was at 38%, before their artificial usage bump to 62% last quarter, and now it looks like Fastly is going back to their normal 40% growth this quarter (70 million over 50 million is 40%). I also put part of the money into Docusign.
Please remember that I may be totally wrong about all of this!!!