Rackspace: A Wall Street Darling

By ServerWatch Staff (Send Email)
Posted November 28, 2011

Calling Rackspace a "darling of Wall Street," Forbes.com says the question for investors is whether Rackspace deserves a 50x multiple and whether its current march, up 50 percent over past twelve months, will continue. In this report, author Darcy Travlos lays out the Bull and Bear case for Rackspace.


"Today, 81% of Rackspace’s business is providing hosting services to Small and Medium Sized Businesses (SMBs) and 19% of Rackspace’s revenues are earned through providing Cloud services, standardized software offerings. While hosting is growing at 24% year over year growth, the higher-margin Cloud segment is growing at 89% over the same period last year. Rackspace holds the number two market share position in the Infrastructure As A Service piece according to 451Group, with 8.6% markets share (Amazon holds the number one position with 56%). However, it is the smaller, accelerating and profitable piece that gets investors excited.

"Rackspace has taken on several initiatives to stay ahead of the trend on its Cloud offerings, significantly founding the open source organization OpenStack. To date, OpenStack has 130 participating companies to develop to open standards for cloud software and services. Rackspace, in turn, offers services to its clients to assist in the integration and management of OpenStack software."

Read the Full Story at Forbes

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