Key Stats for RXT Stock
- Price Change for RXT stock: 37%
- RXT Share Price as of Feb. 20: $1.68
- 52-Week High: $2.89
- RXT Stock Price Target: $1.48
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What Happened?
Rackspace Technology (RXT) stock surged sharply last week after the company announced a strategic partnership with Palantir Technologies focused on deploying artificial intelligence solutions for enterprise customers.
The announcement triggered a violent rebound from penny-stock levels, with shares rising over 300% intraday at peak levels before settling 37% higher by week’s end.
Under the partnership, Rackspace will support the deployment, hosting, and managed operations of Palantir’s Foundry and Artificial Intelligence Platform (AIP). The collaboration positions Rackspace as a key services partner for enterprises looking to operationalize AI workloads across hybrid and private cloud environments.
The rally came after a prolonged sell-off driven by declining revenues, margin compression, and heavy leverage, which left the stock heavily shorted and vulnerable to a sharp squeeze.
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According to Street Targets data, analysts currently see a mean price target of $1.48, which implies limited upside from recent levels following the rally.
Targets have steadily declined over the past year as Rackspace has continued to report revenue contraction and operating losses, even as cost controls improved.
What the Market Is Telling Us About RXT Stock
The sharp move in RXT stock reflects speculative optimism around AI exposure, rather than a fundamental turnaround.
Rackspace’s financial profile remains challenged:
- Revenue declined 7% YoY in the last fiscal year
- Gross margins fell to ~20%, down sharply from over 30% three years ago
- The company posted a net loss of $249 million over the last twelve months
- Total debt exceeds $3.2 billion, while equity remains negative
Despite these headwinds, RXT continues to generate positive free cash flow, with $69 million in LTM free cash flow, which has helped stabilize liquidity.
Valuation multiples remain compressed, with the stock trading at roughly 0.15x forward sales and ~12x forward EBITDA, reflecting both financial stress and optionality tied to execution.
Investors now appear focused on whether AI-related services can stabilize revenue trends and improve margins over time, especially ahead of the company’s Q4 2025 earnings report scheduled for Feb. 26, 2026.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
