Tuesday, February 25, 2014

Rackspace's Challenges in 2014

Shareholders in cloud provider Rackspace (NYSE: RAX  ) endured a rough time after the stock fell 15% on the week of its results. While the numbers were slightly better than analyst estimates, investors reacted badly to the announcement that CEO Lanham Napier was leaving the company. Has the market overreacted and made the stock a good value?

Rackspace racks up uncertainty
Napier's announcement certainly shocked the market, and negative surprises are the last thing that a company clouded in uncertainty like Rackspace needs right now. Essentially, there are two fears hanging over the stock. The first is well-known, but the second might prove even more problematic in the long term.