Fastly Inc. shares plummeted more than 25% in after-hours trading Wednesday, after the software company said that its largest customer, TikTok parent Bytedance Inc., did not use its product as much as expected amid a threatened ban in the U.S.
Fastly
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-4.38%
disclosed in a news release that it now expects third-quarter revenue of $70 million to $71 million, after previously guiding for sales of $73.5 million to $75.5 million. The company also said that its full-year guidance should no longer be relied upon, and that a new forecast would be issued when the company fully reports earnings on Oct. 28.
The company stated that its largest customer did not use its products, which charge based on usage, as much as expected “due to the impacts of the uncertain geopolitical environment.” While Fastly did not disclose the name of that customer in the release, Fastly has admitted in filings with the Securities and Exchange Commission and elsewhere that its largest customer is Bytedance.
“The current global environment has in some ways fueled our business, but has also created areas of uncertainty,” Chief Executive Joshua Bixby said in a statement. “While our preliminary third quarter results reflect the challenges of a usage-based model, we believe the fundamentals of Fastly’s business remain strong, as does demand for our platform.”
President Donald Trump has attempted to ban TikTok from operating in the U.S. unless China-based Bytedance transfers ownership to a U.S. entity. While there was an agreement to institute a new entity in the U.S. with help from Oracle Corp.
ORCL,
-0.01%
and Walmart Inc.
WMT,
-1.56%,
that move appears to be on hold as TikTok fights the ban through the U.S. court system, where a judge halted the ban late last month.
For more: The TikTok geopolitical soap opera is a confusing mess
Fastly stock closed with a 4.4% decline at $123.19 Wednesday, then plunged to less than $90 a share in after-hours trading following the announcement. The San Francisco software company went public in May 2019 for $16 a share.
