• Wondering whether Fastly's US$16.32 share price reflects fair value, a bargain, or a lot of hope? This article walks through the key numbers so you can judge that for yourself.
• The stock is up 60.2% year to date and 127.0% over the past year, even though it has fallen 4.0% over the last week and 35.2% over the past month. These moves can change how you think about both upside and risk.
• Recent headlines have focused on Fastly's position in edge computing and content delivery, along with investor attention on whether the business can convert its technology and customer base into stronger fundamentals. That backdrop helps explain why sentiment has shifted quickly at times, feeding into the sharp moves you see in the recent returns.
• Fastly currently has a valuation score of 2/6. Next you will see how traditional methods like multiples and discounted cash flow relate to that score, followed by a broader way to think about what the market might really be pricing in.

Fastly scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Fastly Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes projected future cash flows and discounts them back to today, aiming to estimate what the entire business could be worth right now based on those expected cash streams.

For Fastly, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about US$55.9 million. Analysts and model estimates project free cash flow of US$49.7 million in 2026 and US$69.4 million in 2027, rising to a modelled US$133.3 million by 2028. Beyond that, Simply Wall St extrapolates further annual figures out to 2035 using its own assumptions to complete the 10 year cash flow curve.

After discounting all those projected cash flows back to today, the DCF model arrives at an estimated intrinsic value of roughly US$23.93 per share. Against the current share price of US$16.32, this implies Fastly trades at about a 31.8% discount, and the stock screens as undervalued on this cash flow view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Fastly is undervalued by 31.8%. Track this in your watchlist or portfolio, or discover 49 more high quality undervalued stocks.

Approach 2: Fastly Price vs Sales

For companies where profitability is limited or still developing, the P/S ratio is often more useful than P/E, because it compares the value of the stock to the revenue base rather than to earnings that may be volatile or negative.

Investors usually expect higher growth and higher risk companies to trade on a higher P/S multiple, while slower growth and lower risk profiles tend to sit closer to the market or industry average. There is no single “right” P/S level, so context really matters.

Fastly currently trades on a P/S of 3.91x. That is above both the IT industry average of 2.22x and the peer average of 1.59x. On simple comparisons this could make the stock look expensive. Simply Wall St’s Fair Ratio for Fastly, however, is 3.36x. This proprietary figure reflects factors such as earnings growth estimates, industry, profit margins, market cap and company specific risks, so it can be more tailored than a plain peer or industry check.

Comparing Fastly’s actual 3.91x P/S to the 3.36x Fair Ratio suggests the stock is pricing in more optimism than the model implies.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Fastly Narrative

Earlier there was mention that there is an even better way to think about valuation, so this is where Narratives come in. They give you a clear story behind your numbers by tying your view on Fastly’s future revenue, earnings and margins to a forecast and then to a fair value that you can compare directly with the current share price.

On Simply Wall St’s Community page, Narratives are short, structured views that link what you believe about Fastly’s business, such as whether edge computing and security can support a fair value near US$20.00 or closer to US$7.00, to a set of financial assumptions and an implied value. This implied value updates automatically when new news, guidance or earnings are added, so you always see how your story lines up against the market price and can decide whether the stock looks expensive or cheap under that specific viewpoint.

For Fastly, however, we will make it really easy for you with previews of two leading Fastly Narratives:

Fair value in this narrative: US$19.17 per share

Implied discount to that fair value at US$16.32: about 14.9% below the narrative fair value

Assumed revenue growth: 11.56% a year

• Focuses on Fastly growing higher margin security and edge computing services, along with cross selling across its platform to deepen customer relationships.
• Assumes that execution on enterprise customers, international expansion, and tighter cost control can steadily improve margins and free cash flow over time.
• Flags risks from intense competition, customer concentration, and ongoing investment needs that could keep profitability under pressure if growth does not keep pace.

Fair value in this narrative: US$4.97 per share

Implied premium to that fair value at US$16.32: about 228.3% above the narrative fair value

Assumed revenue growth: 9.93% a year

• Frames Fastly as a potential beneficiary of rising AI and edge computing usage, but questions how much of that story is already reflected in the share price.
• Points to the earlier boom and pullback in the stock as a reminder that popular themes can draw in traders and then reset when expectations get ahead of fundamentals.
• Highlights that broader macro and sector shifts could redirect attention and capital to other areas, which may limit how far a sentiment driven re rating can go if fundamentals do not keep up.

If you want to see how other investors are joining these dots, and how the full numbers sit behind each story, See what the community is saying about Fastly.

Do you think there's more to the story for Fastly? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.