PreMarket Prep Stock Of The Day: Fastly

When an issue has the kind of run that shares of Fastly Inc. FSLY have had since the March low, the company can do everything right in its earnings report and still get slammed. The huge decline makes it the PreMarket Prep Stock Of The Day.

What They Do: Fastly operates edge cloud platform, designed to be programmable and support agile software development. The edge cloud complements data center, central cloud, and hybrid solutions. Its customers include digital publishing, media and entertainment, technology, online retail, travel and hospitality, and financial service industries.

The company primarily derives revenue from customer usage of its platform.

Mostly Range-Bound Off IPO: The company debuted in March 2019 at $21.50. From that time until February, it was in a trading range between $14.12 and $35.25. It didn't spend much time on the edges, mostly trading in the $18-$25 area.

When the broad market cratered in March 2020, it took Fastly along with it. From its January high ($25.84), it was cut in half when it bottomed on March 16 at $10.63. The following day, it found just above that level at $10.66 and put in place a near-perfect double bottom

Mostly Uninterrupted Rally: After a slow steady rally that took the issue to $23.05 by May 6, it got a big boost on May 7. The catalyst for the rally was first-quarter earnings. Although it missed on EPS by a penny, it beat on sales by $3.54 million. The company also raised its quarterly and full-year outlook.

The day following the report, it rallied from $23.05 to $33.58 on six times the previous day's volume. From there it rallied in a straight-up fashion until it found a temporary peak at $100.23 on July 10.

Profit-takers came into the issue and nudged it to $75.22 by July 24, before it mounted a vicious pre-earnings rally. Over the next seven sessions, it finally peaked on Wednesday at $117.79 before retreating to close at $108.92.

Q2 Beat And Raised Guidance Ignored: After the close on Wednesday, the company announced second-quarter EPS of 2 cents along with a sales beat of $3.6 million. Once again, they raised guidance. However, following such a spectacular run in the issue, the good news was greeted with sellers and more sellers.

Never Had Chance After The Print: The way the issue acted following the report, it seemed as though some investors had there mind made up to sell no matter what. Within minutes, it traded down to $95, some $14 below its closing price. It attempted to rebound on a few different occasions, but was met with heavy sellers after every rebound.

For the regular session, it opened at $89.91 and had a brief bounce to $94 before continuing its move lower. It has continued to make new lows for the session, with the current one standing at $86 as of 12:15 p.m. EST.

If the decline continues, there may be minor support at its July 23 low ($83.68). In addition, the issue may find willing buyers at $80 area, as it comes in between a pair of lows from July 28 ($79.01) and July 29 ($79.01).