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Rackspace Hosting, Inc. Message Board

  • funnnyman90210 funnnyman90210 Jun 5, 2013 12:18 PM Flag

    This is the "New Normal" for RAX

    Stock will not "jump" from here as Bulls are hoping & wishing -

    1) IBM spoke yesterday when they acquired SoftLayer and they paid a multiple in the same zip code as RAX. Maybe one turn higher - understandable given the Control Premium they are getting - the multiple is consistent with comps

    2) IBM will POUR money into SL with RAX squarely in their target zone.

    3) RAX is grappling with their own issues missing targets last 2 quarters BECAUSE of competition

    4) Competitors are way stronger than RAX

    5) The market as a whole (macro) is correcting. High multiple companies like RAX will suffer more than the market as a whole. That's elementary.

    The only thing going for the bulls now is that the stock, on a technical basis (RSI

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    • IBM, Goog. FB and others have stpped up their interest in the Cloud both storage and networking. This spells the end of fast growth for RAX and TDC whic transaltes to a lower P/E.

    • I've watched in amazement when the stock was in the high 70s wondering how it could possibly be trading at such a high multiple. I even got burned trying to short at those levels. It was only a matter of time before the stock got a dose of reality. The market cap has been slashed by about 60% from January highs.

      I'm not taking anything away from your analysis, which I agree with.

      From a technical perspective, it looks to me like a short term bottom is forming based on RSI and divergences. I do not foresee the stock going as low as $30 on the current trajectory, which is why I started a long position today. Barring some kind of horrible news or catastrophic market-wide event, this area should hold. The stock is firmly oversold and selling was exacerbated by the market-wide dumping today. I'm not rigid and will abandon the trade if this area does not hold. There are still 10 million shares short

    • (got cut off) The only thing going for the bulls now is that the stock, on a technical basis (RSI

21.55-1.39(-6.06%)Jun 24 4:06 PMEDT