Fastly, Inc. (FSLY) experienced a significant pre-market plunge of 22.14% on Thursday, extending sharp losses from the post-market session.

The dramatic decline followed the company's release of its first-quarter earnings report, which showed adjusted earnings of 13 cents per share, beating Wall Street expectations of 8 to 9 cents. Revenue also exceeded forecasts, rising 20% year-over-year to $173.02 million. However, investors focused on disappointment in the company's security segment, where revenue of $34.9 million missed some analyst expectations of $36.9 million. This segment captures the bulk of Fastly's AI-related traffic, which failed to impress the market despite 47% year-over-year growth.

The sell-off represents a classic "sell-the-news" reaction after a substantial pre-earnings rally. Fastly's stock had gained approximately 210% year-to-date and experienced volatile gains in the days leading up to the report as investors positioned for strong results. With elevated expectations already priced into the stock, the specific shortfall in AI-related security revenue prompted widespread profit-taking, driving the sharp decline in both after-hours and pre-market trading.