 Okay folks, welcome to a quick analysis of the shares of Fastly Inc. Symbol FSLY. What we're going to talk about on this video is the after hours price action. We'll talk about their earnings. We'll talk about the risks associated with this stock in a bit of detail. We'll review whether or not we have a catalyst, meaning a short covering rally potential to send these shares up higher after this big sell-off. And then we're going to wrap it up with some technical analysis of the charts and we'll identify where we have historical support levels. I wouldn't be using a daily chart with this stock. You need to pull back at a bare minimum to a weekly chart, even better a monthly chart to identify where there is rock solid support, where buyers of like mine may want to step in and bid the shares back up. So let's get to it. The shares of Fastly closed out the day at 123 spot 1-8. Last tick on Fastly was 92.74 after bouncing off the 86 spot 4-0 level in the after hours session. Now the chart that we're using is a 30-minute chart. You can see that we became very, very oversold trading with RSI down below the 10 mark. So this dead cap bounce, and that's exactly what this is, a dead cap bounce or a bare flag setup is an all probability going to fail. So I would not be a buyer of these shares on what appears to be a rally back. It was oversold. It is now rallying back. I do believe that we could quite possibly head up a bit higher here, but ultimately we are probably going to roll over. I'm going to go over the wise now when it comes down to the risk associated with the stock. But first, let's talk about the report. Now here's the headline off of market watch. Fastly stock plunges more than 25% after TikTok fails to use its software as much as anticipated. Now here's where things get a bit ugly for the shares. So we know the headline, TikTok not using them. So they're in the middle of a political tug of war at current TikTok doing battle with the Trump administration. Not only are they now expecting third quarter revenue lower after previously guiding up shares, the company is now going to amend its full year guidance saying that it could be no longer relied upon with the forecast coming out October the 28th. So in my book, this is dead money in the very short term. So here's where we get a bit involved with the risks associated with purchasing the shares. And many years ago, I used to trade a stock called PMCC era. They're no longer around. They were bought out many years ago, but they derived 10% of revenues from Cisco systems at the time. It was a high flying stock, but that always bothered me that they had so much invested with one client. Now taking the look at Fastly, Fastly contributed 12% of its revenue for the first six months of the calendar year. So that's a concern. They have a lot of eggs in one basket with TikTok and it only gets worse from here because Oracle has its own cloud computing business and knowing Larry Ellison, I'm not sure why he would outsource TikTok hosting to another company when he could bring it in house, assuming, and I'm no computer engineer, nor do I know how the cloud business works. But I do know Larry Ellison and the cloud hosting business is extremely competitive business. And I'm going to link to this site. This is from Datanize. And you can see all the competitors in the cloud computing business. And here's Fastly. They have a couple of businesses, Fastly site delivery of the markets here. They're only 0.10%. They have other businesses here, which so net net, they have a bigger footprint in the cloud computing arena. And here is Oracle's cloud business. And again, I am no computer engineer. So perhaps TikTok wouldn't work off of their infrastructure. If you're sitting out there with a computer engineer degree or you study these companies wholeheartedly every day, day in, day out, and you're saying to yourself, this guy knows nothing about cloud computing, you're right. You're right. I know zero about the cloud computing business. But I do know technical analysis. So let's get to it. What's going to spike this stock up higher? The first thing I like to do is take a quick peek at the fundamentals. And this is not a big player. Revenues are growing, but this is going to get amended. Quarterly revenue growth year over year 61 spot 7%. That's going lower unless other customers could pick up the slack. But I think the company has already addressed the fact that that's not going to happen. Their cash position relative to debt favorable. Now, here's what I really want to know about. What is the short interest? Do we have a short squeeze potential here? And you may be saying, Bob, geez, look at this. This is an opportunity. The number of shares short as a percentage of the float as of September the 30th is 9.84%. That's one way of looking at it. The other way of looking at it is this way. And this is the way that I use it. I take a look at the number of shares held short right here as of September the 30th, little over 8 million shares held short. And then I divide this number into the average volume over three month rolling period. And that is 9.66 million shares on any given day. Therefore, you have less than one day to cover all the shorts that are in the stock. So is there a short squeeze potential? No. Also concerning is that back in May, they had announced a secondary offering at 41.50 per share. In addition to a 30 day option for the underwriters to purchase up to an additional 900,000 shares of Class A common stock. And again, this is back in May. So my concern is, is that there's a rush to issue another round of shares to the public, thus diluting current shareholders. Now moving on to the technical analysis of the charts and identifying where we might find some support. Normally I would use a monthly chart. But in this instance, I'm going to use a weekly chart because we simply don't have enough data to use a monthly chart. So let's swing over to a weekly chart. So this weekly chart is real time. It's calculating in the share price after hours. And you can see that where we are trading at current is right at the top of a volume shelf. We bounced right off of it at 86.52. Give me take a few pennies. Given the risk in the stock right now, while this appears to be very, very good support and in normal circumstances, I would say that it's a buy and perhaps we'll bounce around here. I think ultimately we break. So where do we find support on the shares of Fastly? If the NASDAQ shrugs off its recent weakness, which it may well do, especially if we get a stimulus package out of Washington. Well, then we may just may hold 75.99. I don't think 86.52 is going to hold. I think what we need to do from a technical perspective is in a healthy market, I'm breaking this down into a healthy market bottom and a market that is under pressure, if not in correction mode. So in a healthy market, I think that the best thing that could happen for Fastly is for it to pull down, retest 75.99 and just set an alert folks. If you're looking to buy this stock, you need to show a lot of patience because in your corner, you do not have a multi-day short squeeze potential. You're certainly not going to find value buyers buying the shares at these levels. All you can hope for is amateur money chasing what they believe to be an oversold stock, but they will learn their lesson very, very quick. So here we have it. Here are my settings. I want to know when we bounce off of 75.99, weekly timeframe. My note to myself is to remind me why it's down, because it may take several days, if not a week or so, to get down there. So we'll keep this active for the next 14 days. Now I also put in that note to myself that this was support level number one of two. Where do I think ultimately we will probably land before we get a real serious bounce right down here? 69.65 per share. So here's my note to myself. Touch bounce off of 69.65, fastly support level number two of two hit. This is the ideal support level that we'd like to get involved with it at. Note to self, look for a bounce up to 86.52 resistance. So here's the trade. Ideally we hit 69.65 and we overshoot to the downside closing back above it. That would signal to me a short term bottom in the share price. The reason why I am skeptical that the shares won't hold the counter trend rally off of this support level is based upon the observation of the stokes. The stochastics on a weekly basis are very, very weak and given the price action and all probability by next week, they'll be trading down below the 50 mark. And what I always teach members is that when you get stochastics trading down below 50 and they continue to decline, you might see a rally in the shares, but those rallies tend to fade. So if you go chasing the stock, be very, very careful because you're probably going to get burned. Let the shares come to you. Whatever trading software, this is trend spider. If you like it, you like automated trend lines like this, click of a button bottom of the screen. There you have it. These are other support levels, but I don't think we're going down there quite yet. Take those off 35% discount code in the video description area or below the video if you're watching us on the website back to back to what I was saying, set your alerts on whatever software that you're using, set it and forget it. Don't go speculating that this is the big opportunity. It's not you can bet your bottom dollar that you're going to see profit taking by both institutions and by individuals. You will see counter trend rallies, they're going to fail, wait for support levels to get hit. There's no cavalry coming to the rescue, visa V, a short covering rally. And if there's going to be a short covering rally, it will not be an intense one until we hit historical support. Where might that be? I don't think it's going to be here where we're trading with bounce this evening. I think it's down here at one of these two support levels. So please show patients, members will watch it. And the other concern I have here is the number of firms with that still have buy ratings on the stock. Now, current Suisse and Steve were underwriters of that last offering back in May. So maybe they'll hold off or maybe not. Maybe they'll maybe they're out of the position for all I know, unless there's a lockup period. So be aware, you have some buy ratings on the stock and these firms can go to sell or hold. Both of the same is perceived by the street. So be very, very careful here. Let all the news come out. Let them offer their secondary. Let them get the downgrades way to the 28th of October. Let them get that news out. You probably see selling into the 28th. If you hit support levels on the 28th and they come in with even worse news than what was expected, guess what? The shares are probably going to bounce. You need to show patience. And again, members will watch it. And also members, I posted market wrap on the members area. Go check it out. Everybody have a profitable trading day tomorrow and be well.