Fastly shares plunge on worries about TikTok
Posted October 15, 2020 1:36 p.m. EDT
Updated October 15, 2020 2:01 p.m. EDT
CNN — Fastly shares plunged nearly 30% Thursday morning after the company said that demand from its largest customer — TikTok's owner, ByteDance — "did not meet expectations."
In a preliminary third-quarter earnings report, the cloud computing service said it expects quarterly revenue of about $70 million to $71 million, which falls below analyst projections of $73.5 million to $75.5 million.
The drop in revenue, the company says, is a result of the uncertainty surrounding President Trump's TikTok ban.
"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," the company wrote.
That "disclosed largest customer" is ByteDance, which accounted for 12% of Fastly's sales during the second quarter of 2020, according to the company's most recent filing with the Securities and Exchange Commission.
Fastly was one of the pandemic's top-performing companies, having risen more than 350% on the Nasdaq in 2020. Still, the threat of a TikTok ban has loomed large, and CEO Joshua Bixby has acknowledged the potential loss in revenue if Trump's orders were to go into effect.
"Any ban of the TikTok app by the US would create uncertainty around our ability to support this customer," Bixby said on an earnings call in August. "While we believe we are in a position to back-fill the majority of this traffic in case they are no longer able to operate in the US, the loss of this customer's traffic would have an impact on our business."
The company will release full third-quarter results on October 28.