Fastly plunges 37% as customer ByteDance, TikTok owner, hit by geopolitics
Shares of Fastly, the provider of edge infrastructure as a cloud service, Wednesday afternoon warned it will miss its previous revenue projections because its top customer, ByteDance, the Chinese firm that has owned TikTok, did not spend on its services as expected last quarter.
ByteDance's operation of TikTok is being transferred to a Oracle as part of a deal announced last month between Oracle and Wal-Mart and private investors, after the Trump Administration brought pressure on TikTok, threatening to shut down the service in the U.S.
The company cut its Q3 revenue forecast to a range of $70 to $71 million from a prior range of $73.5 to $75.5 million offered back on August 5th.
The cut in outlook, said Fastly, reflects the fact that "Due to the impacts of the uncertain geopolitical environment, usage of Fastly's platform by its previously disclosed largest customer did not meet expectations, resulting in a corresponding significant reduction in revenue from this customer."
Fastly said in its latest quarterly statement that ByteDance accounted for 13% and 12% of revenue for the three and six months ended June 30, 2020, respectively.
Fastly added, "During the latter part of the third quarter, a few customers had lower usage than Fastly had estimated."
Said CEO Joshua Bixby, "The current global environment has in some ways fueled our business, but has also created areas of uncertainty. While our preliminary third quarter results reflect the challenges of a usage-based model, we believe the fundamentals of Fastly's business remain strong, as does demand for our platform."
Fastly expects to offer full results on October 28th.
Fastly stock is down $33.18, or 37%, at $90, in late trading.