Rackspace Technology (NASDAQ:RXT) Stock Falls 14.1% - Here's What Happened

Key Points

• Rackspace Technology shares fell 14.1% to about $2.57 in mid-day trading, with volume reaching roughly 2.34 million shares—87% below the average daily volume.
• Analyst sentiment remains weak: the stock was downgraded to “sell,” another rating reaffirmed a “sell,” and the consensus rating is “Reduce” with a $4.00 price target.
• Executives sold shares under pre-arranged Rule 10b5-1 plans to cover tax obligations, contributing to 714,141 insider shares sold over the past three months; institutional investors still own 82.48% of the company.

Rackspace Technology, Inc. (NASDAQ:RXT - Get Free Report)'s share price dropped 14.1% during mid-day trading on Friday. The company traded as low as $2.57 and last traded at $2.5670. Approximately 2,344,051 shares traded hands during mid-day trading, a decline of 87% from the average daily volume of 17,552,451 shares. The stock had previously closed at $2.99.

Analysts Set New Price Targets

RXT has been the subject of a number of recent analyst reports. Wall Street Zen downgraded Rackspace Technology from a "hold" rating to a "sell" rating in a report on Saturday, August 15th. Weiss Ratings reaffirmed a "sell (d-)" rating on shares of Rackspace Technology in a report on Friday, August 28th. One equities research analyst has rated the stock with a Hold rating and one has given a Sell rating to the company. Based on data from MarketBeat.com, Rackspace Technology has an average rating of "Reduce" and a consensus price target of $4.00.

Rackspace Technology Trading Down 12.7%

The company has a market capitalization of $665.47 million, a P/E ratio of -4.01 and a beta of 3.10. The firm has a fifty day moving average of $3.41 and a 200 day moving average of $3.19.

Rackspace Technology (NASDAQ:RXT - Get Free Report) last posted its quarterly earnings data on Monday, August 10th. The company reported ($0.08) earnings per share for the quarter, beating analysts' consensus estimates of ($0.09) by $0.01. The firm had revenue of $670.10 million for the quarter, compared to the consensus estimate of $646.00 million. Sell-side analysts anticipate that Rackspace Technology, Inc. will post -0.28 EPS for the current fiscal year.

Insider Transactions at Rackspace Technology

In related news, CFO Mark A. Marino sold 51,373 shares of the stock in a transaction on Wednesday, September 2nd. The stock was sold at an average price of $2.95, for a total transaction of $151,550.35. Following the sale, the chief financial officer owned 2,865,853 shares of the company's stock, valued at $8,454,266.35. This trade represents a 1.76% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website. 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. Also, EVP Dharmendra Sinha sold 107,002 shares of the firm's stock in a transaction on Wednesday, September 2nd. The shares were sold at an average price of $2.95, for a total transaction of $315,655.90. Following the completion of the transaction, the executive vice president directly owned 3,263,429 shares in the company, valued at approximately $9,627,115.55. This represents a 3.17% decrease in their position. The SEC filing for this sale provides additional information. 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. Insiders have sold 714,141 shares of company stock valued at $2,299,799 over the last three months. 2.30% of the stock is currently owned by company insiders.

Institutional Investors Weigh In On Rackspace Technology

A number of institutional investors have recently added to or reduced their stakes in RXT. ProShare Advisors LLC lifted its holdings in shares of Rackspace Technology by 47.9% during the third quarter. ProShare Advisors LLC now owns 17,834 shares of the company's stock worth $66,000 after buying an additional 5,779 shares during the last quarter. Legal & General Group Plc acquired a new stake in Rackspace Technology during the 2nd quarter valued at $58,000. Quantbot Technologies LP acquired a new stake in Rackspace Technology in the 2nd quarter valued at about $63,000. Allworth Financial LP acquired a new position in shares of Rackspace Technology during the second quarter valued at $66,000. Finally, Strategic Investment Solutions Inc. IL acquired a new stake in Rackspace Technology during the 2nd quarter worth $67,000. 82.48% of the stock is currently owned by institutional investors and hedge funds.

Rackspace Technology Company Profile

Rackspace Technology, Inc is a technology services company that helps businesses design, build, operate and optimize information technology environments across public, private and hybrid clouds. Its offerings are intended to support organizations at various stages of cloud adoption, from migration and modernization to ongoing management and optimization.

The company provides managed cloud services for major cloud platforms, including Amazon Web Services, Microsoft Azure and Google Cloud.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.