2 WallStreetBets Software Stocks to Avoid in May

: fsly | Fastly, Inc. News, Ratings, and Charts

fsly – The technology industry sell-off is intensifying on rising Treasury yields and inflation fears. And because the market is witnessing an investor rotation to stocks with better short-term growth prospects, we think it could be wise to steer clear of wallstreetbets’ (WSB) software company favorites Fastly (FSLY) and Sphere 3D (ANY) for now.

While multiple fiscal stimulus packages and the Fed’s dovish monetary policy stance are driving the economic recovery, concerns over rising inflation and Treasury yields are driving investors to drop overvalued tech stocks. The 13-year high inflation rate and rising Treasury yields have caused a 5.6% decline in the  tech-heavy Nasdaq Composite  over the past five days.

As investors rotate to cyclical stocks to capitalize on the economic recovery, the tech sell-off might continue for some time. The relatively low investor interest in the tech industry amid the fast-paced economic recovery is evident in Technology Select Sector SPDR ETF’s (XLK) 2.5% decline over the past three months. Also, the benchmark Nasdaq Composite declined by 5% over this period.

In light of these developments, we believe investors should steer clear of Reddit forum wallstreetbets (WSB) favorite software companies Fastly, Inc. (FSLY) and Sphere 3D Corp. (ANY) until the broader tech industry stabilizes.

Click here to check out our Software Industry Report for 2021

Fastly, Inc. (FSLY)

FSLY is a cloud computing and real-time content delivery network operator with an international market presence. Its edge cloud platform is designed as Infrastructure-as-a-Service for personalized digital experiences. It also provides cybersecurity services and developer hub services. The Reddit community believes  this stock has  significant potential.

FSLY is currently being investigated by law firm Kahn Swick & Foti, LLC for alleged violations of fiduciary duties by the company’s top management and/or violations of federal laws. The investigation was initiated in March and is ongoing. The implications of the prolonged investigation are casting a negative light on the company, as reflected in its share price performance. The stock has declined 52.6% year-to-date, and 39.9% over the past month.

FSLY’s revenues increased 35% year-over-year to $84.85 million in its fiscal first quarter, ended March 31. However, its dollar-based net expansion rate (excluding Signal Sciences) declined by 400 basis points sequentially, while its net retention rate (excluding Signal Sciences) slumped 800 basis points from the prior quarter. Its operating loss came in at $50 million, up 316.7% from the same period last year. Its non-GAAP loss per share doubled from the year-ago value to $0.12. FSLY missed the Street’s EPS estimate by 9.1%.

Analysts expect FSLY’s EPS to remain negative until at least 2022. Furthermore,  consensus EPS estimates indicate a 900% year-over-year decline in the current quarter (ending June 2021) and a 138.9% decline in its fiscal year 2021.

It’s no surprise that FSLY has an overall F rating, which equates to Strong Sell in our proprietary POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. The stock has a grade of F for Growth and Sentiment, and D for Value, Stability and Quality.

In addition to the grades we’ve highlighted, one  can check out FSLY Ratings for Momentum here.

Sphere 3D, Corp. (ANY)

Based in Canada, ANY operates as a data management and desktop and application virtualization software development solutions company internationally. The company sells its products and software services through its designated distributor and reseller network. Its target customer base includes small- and medium-sized businesses, and distributed enterprises. ANY is discussed frequently on the WSB forum.

In February, ANY terminated its acquisition of Rainmaker Holland, citing regulatory conflicts. In the same month, the company received a public letter of reprimand from Nasdaq, due to its failure to comply with the exchange’s listing rules. Together, these developments make ANY a risky investment bet currently.

For its fiscal year ended December 31, ANY’s revenues stood at $4.80 million, representing a 16.7% decline year-over-year. Its net loss from operations slumped 34.9% from the year-ago value to $5.80 million. This can be attributed to a slight increase in operating expenses to $8.20 million. The loss came in at 98 cents per share over this period. Shares of ANY have declined 31.6% over the past month, and 9.8% over the past five days.

ANY’s POWR Ratings reflect this bleak outlook. The company has an F grade for Quality and Stability, and D for Momentum. Of the 125 stocks in the D-rated Software – Application industry, ANY is ranked #100.

We have also graded ANY for Sentiment, Growth and Value. Get all ANY’s Ratings here.

Click here to check out our Software Industry Report for 2021


FSLY shares were trading at $40.31 per share on Thursday afternoon, down $1.14 (-2.75%). Year-to-date, FSLY has declined -53.86%, versus a 9.74% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditi Ganguly


Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
FSLYGet RatingGet RatingGet Rating
ANYGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Updated 2024 Stock Market Outlook

The bull market continues to rage on with the S&P 500 (SPY) making new highs. That is the past...the question is what does the future hold? That is why 44 year investment veteran Steve Reitmeister provides this updated 2024 Stock Market Outlook to help you carve a path to outperformance the rest of the year. Read on below for the full story...

3 Energy Stocks Set to Soar Beyond Expectations

Given the geopolitical tensions, increasing global oil demand, and supply adjustments, the energy sector is poised for robust growth. Therefore, investors might consider investing in energy stocks TechnipFMC (FTI), Weatherford International (WFRD), and ChampionX (CHX), which are poised to exceed expectations. Keep reading…

Has Carnival (CCL) Stock Turned Into a Buy After Earnings Release?

Carnival Corporation (CCL) reported record revenue in its most recent quarter but still faces a negative bottom line. The collapse of Francis Scott Key Bridge brings more uncertainty to its financials. Given these events, what stance should one take with CCL stock? Read more to find out…

3 China Stocks Positioned for Long-Term Growth

Despite facing challenges, the Chinese economy has demonstrated resilience, as evidenced by recent robust industrial output and retail sales data. Given this outlook, it might be an opportune time to own three top-notch China stocks, JD.com, Inc. (JD), China Automotive Systems (CAAS), and Youdao, Inc. (DAO). Read on…

Investor Alert: “Buy the Rumor, Sell the News!”

Everyone knows that the Fed is going to cut rates at some point this year. That is the worst kept secret on the planet helping to explain how we keep making new highs for the for the S&P 500 (SPY). Unfortunately that creates an interesting predicament for stocks after rates are cut. Plus another hurdle in the 2024 Presidential election. Steve Reitmeister is here to share his insights on the market outlook along with a preview of his top 12 stocks to outperform. Read on for more...

Read More Stories

More Fastly, Inc. (fsly) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All fsly News