August 27, 2020 - An investor in shares of Fastly, Inc. (NYSE: FSLY) filed a lawsuit in the U.S. District Court for the Northern District of California over alleged violations of Federal Securities Laws by Fastly, Inc. in connection with certain allegedly false and misleading statements made between May 6, 2020 and August 5, 2020.

San Francisco, CA based Fastly, Inc. operates an edge cloud platform for processing, serving, and securing its customer's applications. Fastly, Inc. reported that its annual Total Revenue rose from $144.56 million in 2018 to $200.46 million in 2019, and that its Net Loss increased from $30.93 million in 2018 to $51.55 million in 2019.

On August 5, 2020 after market close, Fastly, Inc held its second quarter (“Q2”) 2020 earnings conference call. During the call, Fastly, Inc disclosed that ByteDance, the Chinese company that operates the wildly popular mobile app TikTok, was Fastly’s largest customer in Q2 2020, and that TikTok represented about 12% of Fastly’s revenue for the six months ended June 30, 2020.
This news shocked the market, as TikTok had been under heavy scrutiny by U.S. officials and others since at least late 2019 due to fears that the data it collects from its users could be accessed by the Chinese government. Indeed, on July 31, 2020, President Trump announced a plan to ban TikTok in the U.S. over national security concerns. As Fastly’s Chief Executive Officer admitted on the Q2 2020 earnings call, “any ban of the TikTok app by the US would create uncertainty around our ability to support this customer[,]” and “the loss of this customer’s traffic would have an impact on our business.”
On August 6, 2020, President Trump issued an executive order effectively banning TikTok.

Shares of Fastly, Inc. (NYSE: FSLY) declined from $116.28 per share on August 4, 2020, to as low as $72.55 per share on August 11, 2020.

According to the complaint the plaintiff alleges on behalf of purchasers of Fastly, Inc. (NYSE: FSLY) common shares between May 6, 2020 and August 5, 2020, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between May 6, 2020 and August 5, 2020, the Defendants made false and/or misleading statements and/or failed to disclose that Fastly’s largest customer was ByteDance, operator of TikTok, which was known to have serious security risks and was under intense scrutiny by U.S. officials, that there was a material risk that Fastly’s business would be adversely impacted should any adverse actions be taken against ByteDance or TikTok by the U.S. government, and that, as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.