Traders Purchase High Volume of Call Options on Rackspace Technology (NASDAQ:RXT)

Key Points

• Unusually heavy call option buying hit Rackspace Technology, with traders purchasing 23,438 call contracts on Thursday, about 35% above the average volume.
• The stock fell sharply during the session, dropping $1.76 to $4.82 on volume well above its norm. Rackspace now sits below its 50-day moving average but above its 200-day average.
• Fundamentals and sentiment remain mixed: the company recently missed EPS expectations while slightly beating revenue estimates, and Wall Street’s average view is currently Reduce with a consensus target price of $2.70.

Rackspace Technology, Inc. (NASDAQ:RXT - Get Free Report) saw unusually large options trading on Thursday. Stock traders bought 23,438 call options on the company. This represents an increase of 35% compared to the average volume of 17,408 call options.

Rackspace Technology Stock Performance

Rackspace Technology stock traded down $1.76 during mid-day trading on Thursday, reaching $4.82. The company's stock had a trading volume of 34,601,722 shares, compared to its average volume of 23,618,445. The firm's fifty day moving average price is $5.29 and its two-hundred day moving average price is $2.63. Rackspace Technology has a 12-month low of $0.39 and a 12-month high of $8.60. The company has a market capitalization of $1.20 billion, a P/E ratio of -7.87 and a beta of 2.99.

Rackspace Technology (NASDAQ:RXT - Get Free Report) last posted its earnings results on Thursday, May 7th. The company reported ($0.06) earnings per share (EPS) for the quarter, missing the consensus estimate of ($0.03) by ($0.03). The business had revenue of $678.10 million during the quarter, compared to analysts' expectations of $660.83 million. Rackspace Technology has set its FY 2026 guidance at -0.200--0.150 EPS.

Insider Activity at Rackspace Technology

In related news, CFO Mark A. Marino sold 48,099 shares of the business's stock in a transaction dated Thursday, June 4th. The shares were sold at an average price of $5.56, for a total value of $267,430.44. Following the transaction, the chief financial officer directly owned 3,370,431 shares of the company's stock, valued at approximately $18,739,596.36. The trade was a 1.41% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. 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. 2.30% of the stock is owned by insiders.

Institutional Inflows and Outflows

Several large investors have recently added to or reduced their stakes in RXT. Vanguard Group Inc. grew its holdings in Rackspace Technology by 6.1% during the 3rd quarter. Vanguard Group Inc. now owns 6,288,882 shares of the company's stock valued at $8,867,000 after buying an additional 359,087 shares in the last quarter. Janus Henderson Group PLC boosted its position in shares of Rackspace Technology by 179.7% in the first quarter. Janus Henderson Group PLC now owns 2,937,670 shares of the company's stock valued at $2,878,000 after acquiring an additional 1,887,317 shares during the period. Geode Capital Management LLC boosted its position in shares of Rackspace Technology by 4.2% in the fourth quarter. Geode Capital Management LLC now owns 2,408,000 shares of the company's stock valued at $2,338,000 after acquiring an additional 96,760 shares during the period. Renaissance Technologies LLC grew its stake in Rackspace Technology by 14.0% during the first quarter. Renaissance Technologies LLC now owns 2,041,600 shares of the company's stock valued at $2,000,000 after acquiring an additional 250,700 shares in the last quarter. Finally, JPMorgan Chase & Co. grew its stake in Rackspace Technology by 1.8% during the third quarter. JPMorgan Chase & Co. now owns 1,464,389 shares of the company's stock valued at $2,065,000 after acquiring an additional 26,510 shares in the last quarter. Institutional investors own 82.48% of the company's stock.

Wall Street Analysts Forecast Growth

Several analysts have commented on RXT shares. Weiss Ratings reaffirmed a "sell (d-)" rating on shares of Rackspace Technology in a research report on Tuesday, June 2nd. Royal Bank Of Canada increased their target price on shares of Rackspace Technology from $2.50 to $4.00 and gave the company a "sector perform" rating in a research report on Wednesday, June 17th. Two research analysts have rated the stock with a Hold rating and one has assigned a Sell rating to the company. Based on data from MarketBeat, the company currently has an average rating of "Reduce" and a consensus target price of $2.70.

About Rackspace Technology

Rackspace Technology NASDAQ: RXT is a leading provider of managed multi-cloud solutions and services, specializing in the deployment, management and optimization of public and private cloud environments. The company helps organizations design and operate applications across platforms such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud and its own private cloud infrastructure. Rackspace's core offerings include cloud migration, application modernization, data protection, security services and 24x7x365 operational support.

Beyond cloud hosting, Rackspace offers a range of professional services designed to accelerate digital transformation initiatives.

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