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Rackspace rises again

by
Mario Gabriele
The Generalist
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Rackspace, a cloud computing developer and consulting company, will need to find a niche in services if it wants Wall Street to support its desired $10B valuation.

  • Rackspace is listing an IPO on the Nasdaq as "RXT"
  • Going private in 2016 led to $4B in debt and uncertainty around flagship products
  • Rackspace has $2.4B revenue (95% recurring) and 40% margins
  • Though other recent technology IPOs are broadly up, Rackspace may have trouble achieving a $10B valuation
  • Rackspace will perform well in the long run if it finds a niche in service instead of technology (AWS would provide the technology)
  • Competition from Fastly, Datadog, and others will make current business model difficult to sell to Wall Street
  • Interest payments may also become a roadblock to a high valuation
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