Shares in Fastly, the internet infrastructure company whose breaches removed thousands of popular sites around the world on Tuesday, rose 11 percent in the wake of the outage.
And quickly, the content delivery technology provider designed to speed up online streaming and download speeds, added more than $600 million to market capitalization when trading closed in New York on Tuesday, valuing the little-known company at $6.5 billion.
San Francisco-based Fastly has apologized for an “undetected software bug” that caused interruption It affects 85 percent of its network. Fastly said the bug was triggered when a lone Fastly customer made a seemingly routine change to how their systems were set up.
“Although there were specific circumstances that caused this outage, we had to anticipate that,” said Nick Rockwell, senior vice president of engineering and infrastructure at Fastly.
Although its shares initially fell as news spread of the widespread outages of media companies, broadcast services and e-commerce platforms, the strong recovery suggests that investors may have been impressed by the speed with which the problem was quickly fixed.
Fastly said in a blog post published late Tuesday that 95 percent of its network was “operating as usual” within 49 minutes of discovering the problem.
“We detected the disturbance within one minute, then identified and isolated the cause, and disrupted the formation,” said Rockwell. “This outage was extensive and severe, and we truly regret the impact on our customers and everyone who depends on them.”
The strong response from investors may also reflect the number of big-name companies that the outage has revealed as Fastly customers, including Amazon-owned Twitch, Spotify, Stripe and Shopify, as well as media companies including the BBC, The New York Times and CNN. The Financial Times.
Companies use content delivery networks to store data in dozens of server farms spread around the world, reducing corporate bandwidth requirements and speeding up streaming and downloads for consumers.
Fastly was founded a decade ago and has doubled in value since it went public in May 2019.
Its revenue grew 45 percent last year to $291 million, with more than 2,000 corporate clients, but its net loss expanded 86 percent to $95.9 million in 2020.
Investors’ positive response to Tuesday’s events could be dwarfed if Fastly is forced to offer expensive compensation to most of its clients. Subscribers to the “Golden” support plan are guaranteed 100 percent uptime.
“Any service level failure could harm our business,” a recent regulatory filing outlining potential risks to its business was quickly stated, which also referred to a previous “platform outage” in January 2021.
“If we are unable to meet stipulated service level obligations, including failure to meet uptime and delivery requirements under customer agreements, we have in the past and may be contractually obligated in the future to provide affected customers with service credits that can be serviced,” Fastly said in a report last month.
After similar problems affecting Amazon Web Services and Cloudflare that took down huge numbers of websites last year, Tuesday’s outage once again highlighted the number of the world’s most popular online services that rely on a relatively small number of cloud computing platforms.
“Internet infrastructure is an astonishingly complex network of dependencies, and reliability does not happen by chance,” said Andy Champaign, vice president at Akamai, a competitor of Fastly. “It takes a combination of technology and people who work very meticulously to make sure it works like a well-oiled machine.”