Rackspace Technology Plunges 18.49% on Weak Earnings, Guidance Concerns Amid Sector Volatility

Rackspace Technology’s share price fell to its lowest level so far this month, with an intraday decline of 18.49% on Nov. 8. The stock has lost 20% over the past two trading days, marking its worst performance in recent months as investor confidence wanes amid mixed earnings results and sector pressures.

The selloff followed the company’s third-quarter earnings report, which revealed a non-GAAP loss per share of $0.05—slightly below estimates—despite revenue beating projections by $4.65 million. While cash flow metrics remained robust, with $71 million in operating cash flow, margin compression from infrastructure resale costs and a 1% year-over-year revenue decline highlighted operational challenges. The stock’s post-earnings drop to $1.54 reflected concerns over earnings guidance and broader IT services sector volatility.

Analysts attributed the decline to deteriorating sentiment, with Rackspace’s 25% downward revision in earnings estimates over three months signaling waning confidence. Strategic initiatives, including AI-driven cloud modernization and hybrid multi-cloud partnerships, aim to address growth opportunities but face hurdles such as data sovereignty risks and high infrastructure costs. Meanwhile, the company’s $2.77 billion debt load and projected Q4 revenue guidance of $664–678 million underscore ongoing pressure to deliver profitability improvements.