Shares of Fastly, Inc. (FSLY) took a sharp dive in Friday's trading session, plummeting 5.01% as investors reacted to concerning analyst reports about the company's financial health and growth prospects. The content delivery and edge cloud computing services provider has been flagged as a small-cap stock to approach with caution, contributing to the sell-off.

Financial experts have highlighted several red flags for Fastly, painting a picture of a company facing significant challenges. Among the primary concerns are the company's unimpressive sales trends, with a reported 15.3% annual growth over the last three years falling below the typical performance of software companies in the sector. This lackluster growth has raised questions about Fastly's ability to compete effectively in the rapidly evolving tech landscape.

Adding to investor worries are Fastly's problematic unit economics and high infrastructure costs, reflected in its gross margin of 54.4% - one of the lowest among its software peers. Furthermore, analysts have pointed out the company's unfavorable liquidity position, suggesting that Fastly might need to seek additional equity financing, which could potentially lead to shareholder dilution. These factors combined have led to a bearish sentiment among market participants, resulting in today's significant stock price decline.