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Oklahoma City, OK (August 28, 2020) – On August 27, 2020, a securities class action lawsuit was filed in the United States District Court for the Northern District of California against Fastly, Inc. (NYSE: FSLY). The complaint alleges violations of federal securities laws, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, including allegations of issuing a series of material or false misrepresentations to the market which had the effect of artificially inflating the market price during the Class Period, which is May 6, 2020 through August 5, 2020. More specifically, the complaint alleges that Defendants made false and/or misleading statements and/or failed to disclose: (1) 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; (2) 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 (3) that, as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On August 5, 2020 after market close, Fastly held its second quarter (“Q2”) 2020 earnings conference call. During the call, Defendants 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 this news, Fastly’s share price fell $19.28, or approximately 17.7% from the previous trading day’s closing price of $108.92, to close at $89.64 on August 6, 2020. Fastly’s shares continued to decline on August 6, 2020, when President Trump issued an executive order effectively banning TikTok, dropping another $10.31 per share from the closing price on August 6, 2020, or approximately 11.5%, to close at $79.33 on August 7, 2020.
Plaintiff seeks to recover damages on behalf of all Fastly, Inc. shareholders who purchased common stock during the Class Period and are therefore a member of the Class as described above. You may move the Court no later than Monday, October 26, 2020 to serve as a lead plaintiff for the entire Class. However, in order to do so, you must meet certain legal requirements pursuant to the Private Securities Litigation Reform Act of 1995.
If you wish to discuss this action, obtain further information and participate in this or any other securities litigation, or should you have any questions or concerns regarding this notice or preservation of your rights, please contact: Robin Hester at firstname.lastname@example.org