Why Jim Cramer Thinks Investors Should Steer Clear Of Fastly's Stock

Investors should avoid Fastly Inc FSLY after the stock fell 20% following its earnings report, Jim Cramer said Thursday on CNBC.

What Happened: Fastly reported a quarterly earnings loss of 15 cents per share, which beat the estimate for a loss of 17 cents per share. The company reported quarterly revenue of $85.03 million, which came in below the estimate of $85.73 million.

“During the second quarter, we also managed through a significant outage that impacted our Q2 results and will have an impact on our Q3 and full year outlook," said Joshua Bixby, CEO of Fastly.

Cramer's Take: The outage is impacting the company's outlook and "I just don't even know what it could be worth," Cramer said. The stock was very overvalued to begin with, he added.

"It's still too early to buy Fastly," Cramer emphasized. The decline needs to slow down before investors consider buying the stock, he said.

Analyst Assessment: William Blair analyst Jonathan Ho downgraded Fastly from Outperform to Market Perform, while DA Davidson analyst Rishi Jaluria downgraded the stock from Buy to Neutral and lowered the price target from $60 to $33.

Price Action: Fastly has traded as high as $136.50 and as low as $39.47 over a 52-week period.

At last check Thursday, the stock was down 18.2% at $36.42.