RackSpace's IPO (initial public stock offering) struggles. WSJ says that tech IPO's are struggling and Rackspace is no different.
After initially planning to raise $400 million in an IPO this year, San Antonio-based Rackspace raised $187.5 million Thursday night when its shares were priced at $12.50 each. That was on the low end of the $12 to $16 range the company expected to garner through its IPO auction. ... On Friday, Rackspace shares sank nearly 20% from their offer price, closing at $10.01 in the company's first day of trading. [statesman]
The bonus for reporters and bloggers about IPO filings is the info it contains. As TechCrunch points out:
With the filing we also get a clearer picture of Rackspace’s business and financials. Its revenues grew 62 percent last year to $362 million, but it posted net profits of $17.8 million, which were down 10 percent from the year before. Cash flows from operations, though, remained healthy at $105 million last year, up from $61 million in 2006..... At the end of the year, it had 29,193 customers, compared to 12,677 the year before. But nearly all of that growth was due to its acquisition of Webmail.us.... Rackspace has 36,692 servers across seven data centers ... The company makes $3,504 a year per square foot [techcrunch]
Rackspace Hosting Inc. is NYSE symbol: RAX
Why do tech IPO's struggle? My thoughts are IPO's to many people is a lottery - it's a short term play to make quick cash. In addition, many companies offer a service or product line that the majority of the people do not comprehend. (We live in a world filled 95% with idiots, which doesn't stop them from driving, having kids, or playing the stock market with their kids' college fund).