RXT - Why Rackspace Technology Shares Crashed Hard Today
Shares of Rackspace Technology (NASDAQ: RXT) suffered a sharp correction on Tuesday following the cloud-computing company's first-quarter earnings report. The stock fell as much as 28.1% in the morning session, stabilizing near a 21% drop by noon EDT.
Rackspace's sales rose 11% year over year to $726 million. Adjusted earnings increased by 44%, landing at $0.23 per share. Your average Wall Street analyst would have settled for earnings of roughly $0.21 per share on revenues near $724 million.
Looking ahead, Rackspace's management set up mixed guidance targets for the second quarter with revenues running slightly ahead of current Street projections, while earnings are behind the average analyst's pace by a penny. The full-year earnings guidance pointed to bottom-line profits of roughly $1.00 per share. Here, analysts had been looking for $1.11 per share. Market makers jumped to the conclusion that Rackspace's earnings growth is slowing down, and that's why the stock is falling today.
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Why Rackspace Technology Shares Crashed Hard Today