Rackspace Stock Plummets on First Day of Trading

Investors didn’t exactly scoop up shares of Rackspace stock during the company’s first day of trading.

It was a bit of an inauspicious IPO for Rackspace, which saw its stock nosedive.

Rackspace Technology set the price at $21 a share, and the initial public offering raised $704 million. However, the stock price fell more than 20% Wednesday, to $16.17 a share. According to Fortune, Rackspace’s previous IPO tanked in its first day of trading back in 2008.

Last month, the managed cloud computing company filed its statement with the Securities and Exchange Commission proposing the IPO of its common stock.

On Wednesday, Rackspace announced the pricing of its IPO of 33.5 million shares of common stock. In addition, it granted the underwriters a 30-day option to buy up to an additional 5 million shares of stock at the IPO price, less underwriting discounts and commissions.

The IPO means Rackspace is public less than four years after going private. Apollo Global Management acquired the company in November 2016.

The shares are trading on the Nasdaq under the ticker symbol “RXT.”

In its IPO filing, the company said the COVID-19 pandemic has accelerated cloud transformation efforts for new and existing customers. And it has underscored the importance of multicloud strategies, it said.

“Over the last several months, customers have increasingly turned to multicloud solutions to pivot to new business models and save costs,” it said.

The full extent of how COVID-19 affects Rackspace’s financial condition or operations remains uncertain, the company said.

“Due to our recurring revenue business model, the effect of COVID-19 may not be fully reflected in our results of operations until future periods, if at all,” it said.