Stock Analysis

With Rackspace Technology, Inc.'s (NASDAQ:RXT)) price down 10% this week, insiders might find some solace having sold US$4.1m worth of shares earlier this year.

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Over the past year, insiders sold US$4.1m worth of Rackspace Technology, Inc. (NASDAQ:RXT) stock at an average price of US$21.00 per share allowing them to get the most out of their money. The company’s market cap plunged by US$226m after price dropped by 10% last week but insiders were able to limit their loss to an extent.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Rackspace Technology

Rackspace Technology Insider Transactions Over The Last Year

The Independent Non-Employee Director, Dhiren Fonseca, made the biggest insider sale in the last 12 months. That single transaction was for US$2.5m worth of shares at a price of US$21.25 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$9.17. So it is hard to draw any strong conclusion from it.

In the last twelve months insiders purchased 14.80k shares for US$275k. On the other hand they divested 196.80k shares, for US$4.1m. All up, insiders sold more shares in Rackspace Technology than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

NasdaqGS:RXT Insider Trading Volume May 10th 2022

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Does Rackspace Technology Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Rackspace Technology insiders own about US$169m worth of shares (which is 8.7% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Rackspace Technology Tell Us?

It doesn't really mean much that no insider has traded Rackspace Technology shares in the last quarter. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Rackspace Technology insider transactions don't fill us with confidence. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Rackspace Technology. While conducting our analysis, we found that Rackspace Technology has 2 warning signs and it would be unwise to ignore them.

Of course Rackspace Technology may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

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