Sophisticated Investors Should Avoid: Fastly Inc. (FSLY), Party City Holdco Inc. (PRTY)

Fastly Inc. (NYSE: FSLY) shares are 362.58% up in the year-to-date (YTD) period and have moved -1.93% or -$1.83 lower in the latest trading session. However, stock’s trailing 12-month performance remains nearly +773.38% lower. Comparatively, the stock is -21.18% down YTD and 94.06% over the trailing 3-month period. If we look at the shorter duration, its week performance is 10.25% and -3.78% over the month.

Analyst Recommendations

On August 19, 2020, FBN Securities recommended the FSLY stock is a Outperform, while earlier, Raymond James had Upgrade the stock as a Outperform on August 24, 2020. 12 analysts offering the recommendations for the stock have a consensus rating of 2.40 to suggest that the FSLY stock is a “Moderate Buy. 1 of the 12 analysts rate the stock as a “Sell”, while 1 has rated it as “Underweight”. 5 recommend buying, with 2 rating it as an Overweight.

The stock currently trades at $92.84 and analysts tracking its performance over the next 12 months have a consensus estimate price target of $95.90. The forecasts give the Fastly Inc. stock a price target range of $115.00 on the higher side while at least one analyst think the stock could plunge to a low of $58.00. The two limits represent an upside potential of 19.27% or -60.07%.

Earnings Forecast

Analysts estimate the earnings to increase 300.00% in the current quarter to $0, up from the -$0.09 reported in the same quarter a year ago. For the current year, earnings should grow to an average of -$0.03, up 48.00% from -$0.52 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between -$0.02 and $0.04. Wall Street estimates earnings per share to be at an average of $0.04 for the next year.

Insider Transactions Summary

According to SEC data, total insider shares purchases at the company stands at 56 over the last 12 months, while SEC filings reveal that there have been 73 insider sales over the same period. Insiders have purchases 4,464,881 shares while those sold by company executives and officers stand at 5,611,165. The last 3 months have seen insiders trade a total of 119,528 and 341,564 in purchases and sales respectively.

Bergman Artur, a Chief Architect, Exec. Chair at the company, sold 92,308 shares worth $7.81 million at $84.63 per share on Aug 24. The General Counsel had earlier sold another 16,252 FSLY shares valued at $1.38 million on Aug 24. The shares were sold at $84.72 per share. Bixby Joshua (CEO) sold 10,000 shares at $86.41 per share on Aug 21 for a total of $0.86 million while Bergman Artur, (Chief Architect, Exec. Chair) sold 67,733 shares on Aug 19 for $5.36 million with each share fetching $79.12.

Party City Holdco Inc. (NYSE:PRTY), on the other hand, is trading around $2.74 with a market cap of $237.72M and analyst research firms have a negative stance on its shares. Analysts predict that the stock will reach $2.25 and spell out a less modest performance – a -21.78% return. Some analysts are even forecasting -$0.89 per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the Party City Holdco Inc. (PRTY) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

PRTY’s operating margin was negative on the trailing 12 months basis, remaining steady at -64.00%, while the operating expenses over the recent quarter were at $144.49 million. This represented a 43.27% of the company’s total revenues which amounted $254.69 million. With this in place, we can see that the company’s diluted EPS declined -$1.39 on the year-over-year period, growing to $0.51 as given in the last earnings report.

In terms of the balance sheet & cash flow as of (Sep 2020), the total assets figure advanced to $3.06 billion from $3.13 billion over the previous quarter. The cash flow from operating activities totaled -$48.78 million, significantly higher than the -$105.91 million reported in the year-ago quarter. The company’s free cash flow for the quarter was -$67.11 million.

Insider activity

Insiders have transacted a total of 20 times at Party City Holdco Inc. over the last 6 months, with insider purchases undertaken 20 times and accounting for 6,821,289 shares. Insider sales totaled 0 shares over the same period, with these deals completed in 0 transactions. Looking at these numbers, we realize that net purchases over that period are 20.0 shares. Insiders now hold a total of 5.16M shares after the latest sales, with -411.40% net shares purchased.

Major holders

Insiders own 5.60% of the company shares, while shares held by institutions stand at 43.50% with a share float percentage of 85.04M. Investors are also buoyed by the number of investors in a company, with Party City Holdco Inc. having a total of 162 institutions that hold shares in the company. The top two institutional holders are CAS Investment Partners, LLC with over 10.67 million shares worth more than $15.89 million. As of Jun 29, 2020, CAS Investment Partners, LLC held 11.28% of shares outstanding.

The other major institutional holder is Morgan Stanley, with the investment firm holding over 7.39 million shares as of Jun 29, 2020. The firm’s total holdings are worth over $11.02 million and represent 7.82% of shares outstanding.