NEW YORK (TheStreet) --Shares of Rackspace Hosting Inc. (RAX) are lower by 17.39% to $32.50 in pre-market trading on Wednesday, after the company announced Tuesday afternoon that it has ended its evaluation of alternatives that would result in Rackspace being acquired by another company.
The open cloud company said it's committed to remaining independent and has also announced its president, Taylor Rhodes, will take over as CEO in order to "drive its managed cloud strategy."
Back in May, the company filed a Form 8-K with the SEC after being approached by multiple parties expressing interest in forming a strategic relationship through either partnership or acquisition.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
"After a comprehensive review, the board decided to terminate M&A discussions. Based on Rackspace's reaccelerated revenue growth and its potential trajectory for the coming year, the board concluded the company is best positioned to maximize shareholder value by executing its strategy as the #1 managed cloud company," Rackspace said.
Separately, TheStreet Ratings team rates RACKSPACE HOSTING INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate RACKSPACE HOSTING INC (RAX) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity."