Yahoo Finance Further weakness as Rackspace Technology (NASDAQ:RXT) drops 14% this week, taking one-year losses to 75%
Even the best investor on earth makes unsuccessful investments. But it should be a priority to avoid stomach churning catastrophes, wherever possible. So spare a thought for the long term shareholders of Rackspace Technology, Inc. (NASDAQ:RXT); the share price is down a whopping 75% in the last twelve months. A loss like this is a stark reminder that portfolio diversification is important. We wouldn't rush to judgement on Rackspace Technology because we don't have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 37% in the last 90 days.
After losing 14% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
Check out our latest analysis for Rackspace Technology
Rackspace Technology wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last year Rackspace Technology saw its revenue grow by 7.7%. While that may seem decent it isn't great considering the company is still making a loss. Nonetheless, it's fair to say the 75% share price implosion is unexpected.. Clearly the market was expecting better, and this may blow out projections of profitability. If and only if this company is still likely to succeed, just a little slower, this could be a good opportunity.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Rackspace Technology is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Rackspace Technology will earn in the future (free analyst consensus estimates)
A Different Perspective
We doubt Rackspace Technology shareholders are happy with the loss of 75% over twelve months. That falls short of the market, which lost 25%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 37% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It's always interesting to track share price performance over the longer term. But to understand Rackspace Technology better, we need to consider many other factors. Take risks, for example - Rackspace Technology has 2 warning signs we think you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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