Why Rackspace Technology Stock Skyrocketed On Thursday

Why Rackspace Technology stock soared on Thursday

what happened

Shares of Rackspace Technology (NASDAQ: RXT ) rose Thursday following an impressive third-quarter earnings report . Shares were up 30.5% as of 2:25 p.m. ET.

So that

Rackspace reported adjusted earnings of $0.10 per share for the previous quarter, compared to $0.25 per share. Top online sales rose 3.2% to $788 million. Street Consensus reported revenue of about $773 million, with earnings per share of $0.09.

The multi-cloud service provider reported double-digit revenue growth in the Asia-Pacific market and 8% growth in Europe, but fairly fair for currency. The decline in profit growth is due to the appreciation of the US dollar against other currencies around the world.

And now

The company is simplifying its reporting structure from three to two business lines. With the new structure, Rackspace will manage its public cloud services as one business unit and its private cloud as another. This reporting mechanism starts with the fourth quarterly report within three months.

In addition, Rackspace has appointed a new CEO who will effectively become the prime minister. The new leader is Shashank Samant, who heads digital engineering firm GlobalLogic , which recently bought Japanese tech giant Hitachi for $9.6 billion. The press release highlights Samant's expertise in digital services. However, arranging lucrative acquisitions and a close relationship with private equity firm Apollo Global could signal an impending sale of the company.

Whether Rackspace is looking for a buyer or struggling independently, this report showed some strong signs of life and the stock is cheap. Rackspace shares are valued at 7.9x adjusted earnings after today's increase, including recent financials.