Bullish indicating open at $55-$60, IPO prices at $37
Koushik Srini, President of Technology at Rackspace Technology, Inc. (NASDAQ:RXT), has sold 73,972 shares of the company’s common stock. The sale comes as the company, currently valued at $425 million, faces significant financial challenges, with InvestingPro analysis indicating the stock is trading below its Fair Value. The transactions, executed between March 17 and March 19, 2025, were part of a "sell to cover" arrangement aimed at satisfying tax withholding obligations. The shares were sold at a weighted average price of $1.87, totaling approximately $138,327. The stock has declined over 10% in the past week, while carrying a concerning debt burden of $3.3 billion.
These sales were conducted under a Rule 10b5-1 trading plan that Srini adopted on September 12, 2023. This plan automatically triggers the sale of shares to cover tax obligations related to the vesting of restricted stock units. Following these transactions, Srini retains ownership of 935,114 shares in the company. InvestingPro subscribers can access 11 additional key insights about Rackspace’s financial health and market position through exclusive ProTips.
In other recent news, Rackspace Technology reported fourth-quarter results that exceeded analyst expectations, with adjusted earnings per share of -$0.02, surpassing the anticipated -$0.04. The company’s revenue reached $685.6 million, beating the consensus forecast of $674.98 million, although this marked a 5% decline from the previous year. Rackspace’s private cloud revenue fell by 6% year-over-year to $269 million, and public cloud revenue decreased by 4% to $417 million. For the full year 2024, total revenue dropped by 7% to $2.74 billion.
Looking forward, Rackspace’s guidance for the first quarter of 2025 aligns closely with analyst expectations, with projected revenue between $653 million and $665 million and adjusted EPS between -$0.07 and -$0.09. Despite the earnings beat and in-line guidance, investors appeared concerned about the ongoing revenue declines across business segments. CEO Amar Maletira noted the achievement of record-breaking quarterly sales bookings, the highest since the company’s business units were established. Rackspace also reported cash and cash equivalents of $144 million as of December 31, 2024, with no outstanding balance on its $375 million revolving credit facility. These developments have been closely watched by market participants.
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