Following Major Outage, Fastly's Role on the Internet Comes to Life

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Jun. 9 2021, Published 2:36 p.m. ET

Following a brief—but influential—outage, Fastly's name is becoming known. The CDN (content delivery network) focuses on cloud computing, and its faux paux has people wondering what's going on behind the scenes.

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What does Fastly (NYSE:FSLY) do when things go right? How did the outage change things for FSLY stock?

A brief rehash of the Fastly outage—what caused it?

Fastly's senior vice president of engineering and infrastructure, Nick Rockwell, said in a blog post, "We experienced a global outage due to an undiscovered software bug that surfaced on June 8 when it was triggered by a valid customer configuration change."

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Rockwell continued, "We detected the disruption within one minute, then identified and isolated the cause, and disabled the configuration. Within 49 minutes, 95% of our network was operating as normal."

During the approximated hour that the outage took place, websites like Amazon, Reddit, Google, Instagram, Twitter, Spotify, The New York Times, and more all found themselves halted.

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Fastly's core operations as a CDN

For the user, loading landing pages can feel like magic, but there are actually CDNs working behind the scenes to transfer information. That's where Fastly comes into play.

CDN servers are distributed throughout the globe to communicate with one another across a geographically diverse network. They're the foundation for speedy internet content loading times. Also, they allow search engines like Google to prioritize page speed load times of two seconds or less.

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When Fastly refers to "edge cloud" networks, it just means that its servers are located within close proximity of where they're needed for more efficient loading.

There are a plethora of Fastly competitors

Fastly is far from the only player in the CDN game. Key competitors for Fastly include Amazon Web Services (AWS) and Akamai. Recently, TechFlare put Fastly in second place on their list of the top CDN companies, right below Cloudflare (NYSE:NET). Akamai and Cloudfront from AWS are also on the list.

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Alternative competitors include KeyCDN, StackPath, Microsoft Azure CDN, CDN77, and LeaseWeb.

Fastly stock on the rebound following brief-yet-influential outage

You would think that a technical outage would have a negative impact on the company's stock, but that isn't what happened with Fastly. In fact, the shares rose 12.6 percent over the course of the market day on June 8. The shares went up another 4.9 percent overnight and are balancing out with a 2.74 percent decrease so far on June 9.

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The improved market cap is likely a result of Fastly's ownership of its mistake and the quick resolution for the outage. Shareholders were obviously impressed with the overall response, but the day's returns are only a bandage for an overall difficult year. Fastly is down 36.55 percent YTD, which likely ties in with the tech sell-off that's impacting the sector as a whole.

Rockwell said, "Even though there were specific conditions that triggered this outage, we should have anticipated it. We provide mission critical services, and we treat any action that can cause service issues with the utmost sensitivity and priority."

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