Shareholders in Rackspace Technology (NASDAQ:RXT) are in the red if they invested a year ago
As every investor would know, you don't hit a homerun every time you swing. But it's not unreasonable to try to avoid truly shocking capital losses. It must have been painful to be a Rackspace Technology, Inc. (NASDAQ:RXT) shareholder over the last year, since the stock price plummeted 84% in that time. While some investors are willing to stomach this sort of loss, they are usually professionals who spread their bets thinly. Rackspace Technology may have better days ahead, of course; we've only looked at a one year period. Shareholders have had an even rougher run lately, with the share price down 33% in the last 90 days. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.
See our latest analysis for Rackspace Technology
Rackspace Technology isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Rackspace Technology grew its revenue by 3.7% over the last year. That's not a very high growth rate considering it doesn't make profits. Even so you could argue that it's surprising that the share price has tanked 84%. Clearly the market was expecting better, and this may blow out projections of profitability. But if it will make money, albeit later than previously believed, this could be an opportunity.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think Rackspace Technology will earn in the future (free profit forecasts).
A Different Perspective
Rackspace Technology shareholders are down 84% for the year, even worse than the market loss of 13%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 33% 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Rackspace Technology you should know about.
Rackspace Technology is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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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