Fastly shares jump after outage takes down thousands of websites
Shares in Fastly, the internet infrastructure company whose bungle took down thousands of popular websites around the world on Tuesday, rose 11 per cent in the aftermath of the outage.
Fastly, a provider of content delivery technology that is designed to accelerate online streaming and loading speeds, had added more than $600m to its market capitalisation by the close of trading in New York on Tuesday, valuing the little-known company at $6.5bn. The shares were trading broadly flat on Wednesday morning.
San Francisco-based Fastly apologised for an “undiscovered software bug” that caused an outage affecting 85 per cent of its network. The bug was triggered when a lone Fastly customer made a seemingly routine change to how its systems are set up, Fastly said.
“Even though there were specific conditions that triggered this outage, we should have anticipated it,” said Nick Rockwell, Fastly’s senior vice-president of engineering and infrastructure.
Though its shares initially fell as news broke of the widespread interruption to media companies, streaming services and ecommerce platforms, the strong recovery suggests that investors may have been impressed by the speed with which Fastly fixed the issue.
Fastly said in a blog post published late on Tuesday that 95 per cent of its network was “operating as normal” within 49 minutes of discovering the problem.
“We detected the disruption within one minute, then identified and isolated the cause, and disabled the configuration,” said Rockwell. “This outage was broad and severe, and we’re truly sorry for the impact to our customers and everyone who relies on them.”
The strong response by investors may also reflect the number of big-name companies that the outage revealed as Fastly customers, including Amazon-owned Twitch, Spotify, Stripe and Shopify, as well as media companies including the BBC, The New York Times, CNN and the Financial Times.
Content delivery networks are used by companies to store data in dozens of server farms dotted around the world, reducing companies’ bandwidth requirements and speeding up streams and downloads for consumers.
Fastly was founded a decade ago and the company has more than doubled in value since it went public in May 2019.
Its revenues grew 45 per cent last year to $291m, with more than 2,000 corporate customers, but its net loss widened by 86 per cent to $95.9m in 2020.
Investors’ positive response to Tuesday’s events could wane if Fastly is forced to offer expensive compensation to most of its customers. Subscribers to its “Gold” support plan are guaranteed 100 per cent uptime.
“Any service level failures could harm our business,” Fastly stated in a recent regulatory filing outlining potential risks to its business, which also pointed to a previous “platform interruption” in January 2021.
“If we are unable to meet the stated service level commitments, including failure to meet the uptime and delivery requirements under our customer agreements, we have in the past and may in the future be contractually obligated to provide the affected customers with service credits which could significantly affect our revenues,” Fastly said in a filing last month.
After similar problems affecting Amazon Web Services and Cloudflare brought down large numbers of websites last year, Tuesday’s outage has once again highlighted how many of the world’s most popular online services rely on a relatively small number of cloud computing platforms.
“Internet infrastructure is an amazingly complex web of dependencies, and reliability just doesn’t happen by accident,” said Andy Champagne, vice-president at Akamai, one of Fastly’s rivals. “It takes a combination of technology and people working with rigorous precision to ensure it works like a well-oiled machine.”