• If you are wondering whether Fastly at US$24.05 still offers value after a strong run, you are not alone. This article is set up to unpack what the current price might be implying.
• The stock shows returns of 20.0% over 7 days, 175.8% over 30 days, 136.0% year to date, 255.8% over 1 year and negative 68.1% over 5 years, which points to a very different picture depending on the timeframe you focus on.
• These sharp short term moves have come alongside ongoing attention on Fastly's role in edge computing and content delivery, with investors reacting to how the company is positioned in a crowded part of the software market. Headlines have tended to focus on its competitive position and product relevance, which helps frame why sentiment around the stock can shift quickly.
• Despite this strong share price performance, Fastly currently carries a valuation score of 0 out of 6. Next we will walk through traditional valuation approaches to understand what the market might be pricing in now and then finish with a more complete way to think about its value that goes beyond a single score.

Fastly scores just 0/6 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 model takes estimates of a company’s future cash flows and discounts them back to today’s value, so you can compare that estimate with the current share price.

For Fastly, the model uses a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month Free Cash Flow is about US$51.3 million. Analysts provide explicit Free Cash Flow estimates through 2028, with Simply Wall St extrapolating further projections out to 2035 using the earlier years as a guide. For example, projected Free Cash Flow in 2028 is US$115.7 million, and the discounted values for 2026 through 2035 range from roughly US$40.5 million to US$109.4 million.

When all those projected and discounted cash flows are added up, the model arrives at an estimated intrinsic value of US$17.45 per share. Compared with the current share price of US$24.05, this suggests the stock is about 37.8% overvalued based on this DCF model.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Fastly may be overvalued by 37.8%. Discover 50 high quality undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Fastly Price vs Sales

For companies where earnings are not the main focus, the P/S ratio is often a useful way to think about value because it compares what the market is paying for each dollar of revenue. It is also influenced by what investors expect for future growth and how risky they feel those future sales are, so higher growth or lower perceived risk can support a higher “normal” P/S multiple.

Fastly currently trades on a P/S ratio of 5.85x. That sits above the IT industry average of 1.81x and also above the peer group average of 3.72x. Simply Wall St’s Fair Ratio estimate for Fastly is 3.53x, which is their proprietary view of what the P/S multiple might be based on factors such as earnings growth, profit margins, size, risks and the company’s industry.

This Fair Ratio can be more useful than a simple comparison with peers or the sector because it adjusts for the specific mix of growth, risk, profitability and market cap, rather than assuming all companies should trade on the same benchmark.

With Fastly’s actual P/S ratio of 5.85x sitting above the Fair Ratio of 3.53x, the shares screen as overvalued on this measure.

Result: OVERVALUED

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.

Upgrade Your Decision Making: Choose your Fastly Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St’s Community page you can use Narratives to write your own story for Fastly, link that story to specific forecasts for revenue, earnings and margins, and see a fair value that updates automatically when new earnings or news arrive. This then lets you compare your fair value with the current US$24.05 price to decide whether you see Fastly closer to the bearish US$6 view or the bullish US$20 view, and act in line with the story you believe in.

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.