I’m really hesitant to post again about Factly but I want to play the other side of this coin as this thread is about perspective and thinking things through. Please know I, and most of us, are aware that these points can be argued so please do not reply with point-by-point counter-arguments. This is intended as illustrative. Reality is not so black and white and just because I am posting counter arguments does not mean I disagree with the points in full but rather my thinking is likely weighted somewhere in between, in the grey:
> My thinking is: Yes it has changed, at least form my perception:
All things change. We are trying to figure out if there are fundamentally damaging changes versus business events that happen through which we lean on the health of the company to beat and get past.
> * It has changed at the moment the founder led CEO was replaced with a rookie CEO with no proven experience leading and expanding sales teams and capturing new markets
It is a change. A CEO can not change the hearts, minds or habits of an entire department, with its own existing leadership, that fast. Also the last CEO is still around and in a leadership position. I think this can be dismissed for current events but could be a concern to watch as a shareholder going forward. In other words this is just a theory right now that needs proving to be a factor for negative fundamental change.
> * The blood was in the water in Q2, simply nobody paid attention to the low number of clients as a whole in relation to other similar plays like Cloudflare, extremely low conversion of enterprise level clients ($100k+) - only 7 for 1 quarter, vs Cloudflare 80 (11 times difference)
I think many people did pay attention to this information. There are countless posts on the different business models and plenty of talk about why Fastly spends less on sales and marketing and runs a small team. The fact is the customer growth and average spend are accelerating at Fastly. Comparing to their own past paints a rosy picture, even if the numbers feel small. Even without TikTok I believe they are accelerating.
Comparing numbers to Cloudflare needs way more context. It is not a waste of time but due to their different approaches it needs to be a deeper dive to adjust and compare apples-to-apples and I’m not sure we have the inside info to do that effectively. There are other factors too, like market cap and TAM. I think Cloudflare’s TAM is bigger since they aren’t as niche, for example. This may be a neutral point, or good, or bad…not getting in to the pros and cons here.
Keeping it simple: On this one I see improvement over a past which yielded some pretty nice revenue growth, in spite of us thinking those numbers look low. If they keep making more money, that is proof enough for me.
> * They are loosing business to other companies, it is TikTok, but it is most likely other players as well, some are speculating this can be also Amazon/Shopify (unconfirmed yet). That means their business and story are not that sticky, which speaks volume.
“Speculating” is the key word here. We don’t actually know anything for sure. We suspect based on anecdotal evidence, which does seem strong, that they may have lost some business. BUT, we don’t know the facts, or the true impact should some or all end up to be fact The next quarterly report and Q&A should help a lot here.
On this one I think we all saw the news that there was a real chance 6-12% of their previous revenue source could go away and are hoping they can backfill this with continued growth. If their average spend and customer growth continues to accelerate then the company can dig itself out of the concentration risk a bit more. We should still expect customer concentration but the risk should be reduced as long as things continue the way they have.
> * Are there significant threats? Yes, there are. Biggest one is Cloudflare, Fastly is mentioned in their investor relation presentation as a limited company with 1 point solution - so Mathew Prince is after them
Skipping this one for brevity. Short version: Nothing has changed on the competition front to become a con to me.
> * Red Flag #5 from their Q2 earning call, there was an analyst asking about the leave of one of their Head Sales People/VP of Sales? The CEO response speaks volume again:
“So not feeling a sense of urgency in the sense that that’s an important role to fill, but we’re going to fill it with the right person. And we have ample time to do that.”
I don’t see an issue here. In fact I think it is prudent AND I think it supports the CEO counter argument as well as the one after that. They have a small but strong sales team that is doing just fine. Taking time to get the right person to jive with the existing team and blaze the right trail seems fine.
When earnings comes out we may see a reversion to revenue growth in the mid 40s plus some bad news about customers and that may send the price lower. Or it could be baked in with recent news being digested and things could stay the same; or pop. I never know what the market is going to do to the price so I’m just trying to focus on figuring out if there is fundamental change versus…well, life happening.
I’m somewhere between selling it all and holding it all…I can certainly see the logic for keeping it simple and watching from the sidelines or doing nothing and waiting for more information, or anything in between. This is where perspective and personal choice comes in!.
While I am truly skeptical that things have fundamentally changed in the last month, I won’t ignore this awesome community’s thoughts either! It is a matter of respect and keeping an open mind. It is a meaningful datapoint. It is why I choose to lighten my holdings. It isn’t mathematical. I feed my brain with as much info as I can and then I simply open my portfolio view and look at where I feel I am. Just because I use the word “feel” does NOT mean it is emotionally charged. I mean “feel” as in using one’s hand to feel a texture rather than the “feel” in “feelings”. I strongly believe all the data I feed in to my mind builds an intuition and THAT is what I am tapping into to when I sit down to make a final decision. Then what I am deciding is as simple as, “does this % match my conviction”. Since - if I am honest with myself - my conviction is a little shaken here, I’ll just reduce my holdings to what feels right. I can live with that regardless of the outcome. Then, live, learn, rinse, repeat.
If you read to here and are itching to reply, please read my opening paragraph again first