Not all cloud companies are keeping their pandemic boost

Happy Friday, readers.

It’s been the year of the cloud stocks (exhibit A and B: Twilio and Snowflake).

But it has not been a smooth upward trajectory for Fastly (NYSE: FSLY), a San Francisco-based company that helps deliver digital content. At one point in the pandemic, the company that counts Pinterest and GitHub among its customers was the best-performing tech stock during the crisis and achieved a valuation of about $15.5 billion.

But in recent days, the company has lost over a third of its value in a very 2020, Mad Libs-esque scenario. Fastly warned on Wednesday that earnings for the quarter would be lower than expected due to less usage from Fastly’s largest customer. That customer: TikTok, the short-form video platform backed by ByteDance.

“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’s press release read.

TikTok’s side of the story is known by now: President Donald Trump’s administration threatened to ban the Chinese-owned app if it did not offload its U.S. operations to an American entity. Then Oracle and Walmart stepped in to take up stakes in those operations with Trump’s blessing. But TikTok is still seeking to finalize a deal that satisfies U.S. and Chinese regulators, and the company is also fighting restrictions that would effectively shut down the app on Nov. 12 in the U.S.

Fastly’s largest customer was not the only one to reduce usage in the quarter—“a few customers,” the press release noted without naming them, also had lower-than-estimated usage. That said, shares of the company remain elevated compared to pre-pandemic levels—up 514% since mid-March.

THE BEST WAY TO PITCH? Here’s an interesting study that came up on the wires this week from Yale researchers. Based on some 1,130 pitch videos submitted over the past decade to early-stage accelerators (Y Combinator, MassChallenge, 500 Startups, Techstars, and AngelPad), the researchers found that entrepreneurs who appeared friendly and happy were more likely to raise funding, while those that only spoke of their ability and competitiveness weren’t. But for the startups that raised funding, the accelerators’ decisions didn’t necessarily mean success in the long term (based on the company’s total employment, if it raised follow-up rounds, and, of course, if it’s still alive).

Lucinda Shen
Twitter: @shenlucinda
Email: [email protected]

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