Rackspace Technology (NASDAQ:RXT) Shares Gap Down - Here's Why

Key Points

• Rackspace shares opened sharply lower, falling from the prior close of $3.13 to $2.90; they later traded at about $2.97.
• Analyst sentiment is cautious: MarketBeat reports a consensus “Reduce” rating from one Hold and one Sell rating, with an average price target of $4.00.
• The company’s latest quarterly results beat estimates: adjusted loss was $0.06 per share versus expectations of $0.08, while revenue of $609.1 million topped the $574.0 million consensus.

Rackspace Technology, Inc. (NASDAQ:RXT - Get Free Report)'s share price gapped down before the market opened on Thursday. The stock had previously closed at $3.13, but opened at $2.90. Rackspace Technology shares last traded at $2.9650, with a volume of 2,184,987 shares traded.

Wall Street Analysts Forecast Growth

Several analysts have recently commented on the stock. Wall Street Zen downgraded shares of Rackspace Technology from a "hold" rating to a "sell" rating in a research report on Saturday, August 15th. Weiss Ratings reiterated a "sell (d-)" rating on shares of Rackspace Technology in a research report on Friday, August 28th. One research analyst has rated the stock with a Hold rating and one has assigned a Sell rating to the stock. Based on data from MarketBeat.com, the stock has a consensus rating of "Reduce" and an average target price of $4.00.

Rackspace Technology Price Performance

The company has a fifty day moving average price of $3.31 and a 200 day moving average price of $3.27. The stock has a market cap of $806.67 million, a P/E ratio of -5.44 and a beta of 3.29.

Rackspace Technology (NASDAQ:RXT - Get Free Report) last issued its earnings results on Monday, November 9th. The company reported ($0.06) earnings per share (EPS) for the quarter, topping analysts' consensus estimates of ($0.08) by $0.02. The firm had revenue of $609.10 million during the quarter, compared to the consensus estimate of $573.96 million. As a group, sell-side analysts expect that Rackspace Technology, Inc. will post -0.28 earnings per share for the current fiscal year.

Insider Buying and Selling at Rackspace Technology

In other news, Director Anthony Scott sold 48,780 shares of Rackspace Technology stock in a transaction dated Friday, August 14th. The shares were sold at an average price of $4.25, for a total transaction of $207,315.00. Following the completion of the transaction, the director directly owned 180,215 shares in the company, valued at $765,913.75. This trade represents a 21.30% decrease in their ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available through this hyperlink. Also, EVP Dharmendra Sinha sold 107,002 shares of the business's stock in a transaction dated Wednesday, September 2nd. The stock was sold at an average price of $2.95, for a total transaction of $315,655.90. Following the sale, the executive vice president directly owned 3,263,429 shares of the company's stock, valued at approximately $9,627,115.55. The trade was a 3.17% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last three months, insiders have sold 714,141 shares of company stock worth $2,299,799. Corporate insiders own 2.30% of the company's stock.

Hedge Funds Weigh In On Rackspace Technology

Several large investors have recently added to or reduced their stakes in the business. Voya Investment Management LLC boosted its stake in Rackspace Technology by 27.9% during the 3rd quarter. Voya Investment Management LLC now owns 22,175 shares of the company's stock valued at $83,000 after purchasing an additional 4,843 shares during the last quarter. Russell Investments Group Ltd. raised its stake in shares of Rackspace Technology by 8.7% in the third quarter. Russell Investments Group Ltd. now owns 61,491 shares of the company's stock worth $229,000 after purchasing an additional 4,904 shares during the last quarter. ProShare Advisors LLC raised its stake in shares of Rackspace Technology by 47.9% in the third quarter. ProShare Advisors LLC now owns 17,834 shares of the company's stock worth $66,000 after purchasing an additional 5,779 shares during the last quarter. Legal & General Group Plc bought a new position in shares of Rackspace Technology in the second quarter valued at approximately $58,000. Finally, Quantbot Technologies LP bought a new position in shares of Rackspace Technology in the second quarter valued at approximately $63,000. Institutional investors own 82.48% of the company's stock.

About Rackspace Technology

Rackspace Technology, Inc. NASDAQ: RXT provides multicloud technology services to businesses and public-sector organizations. Its offerings include cloud strategy and migration, infrastructure management, application modernization, data services, and cybersecurity. The company helps customers operate workloads across public cloud platforms, including Amazon Web Services, Microsoft Azure, and Google Cloud, as well as private and hybrid cloud environments. Its services include consulting and ongoing support tailored to customers' technology needs.

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