NEW YORK, Aug. 10, 2026 (GLOBE NEWSWIRE) -- Levi & Korsinsky, LLP notifies investors in Rackspace Technology, Inc. (NASDAQ: RXT) that a securities class action has been filed on behalf of shareholders who purchased securities between May 7, 2026 and July 8, 2026. Submit your information now. You may also contact Joseph E. Levi, Esq. at jlevi@levikorsinsky.com or (212) 363-7500.
RXT closed at $4.37 on July 9, 2026, down $2.21 per share, or 33.6%, from the prior session, on unusually heavy volume. Full-year 2026 revenue guidance was cut by $150 million and adjusted EBITDA guidance by $20 million. The deadline to apply for lead plaintiff appointment is September 28, 2026.
What the Company Disclosed
Rackspace's quarterly report for the period ended March 31, 2026 addressed segment economics in general terms. SEC filings stated that "[t]he mix of revenue has shifted in recent years, from our Private Cloud offerings to infrastructure resale and services within Public Cloud," and that Private Cloud "deliver[s] higher segment operating margins, but also require[s] a higher level of capital expenditures." The same filing described the Public Cloud focus as "expanding segment operating margins by driving cost efficiencies and growing higher-margin services revenue."
What Plaintiffs Allege Was Missing
The complaint challenges that framing as incomplete. Disclosure language indicated an ongoing, gradual industry trend rather than specific, already-identified decisions to withdraw from revenue lines, according to the action.
Disclosure Gaps Alleged
- No disclosure that enterprise AI plans would require significant re-prioritization of capacity and capital away from the higher-margin Private Cloud segment, which carried a 24.7% operating margin versus 4.7% in Public Cloud, as alleged
- No disclosure that Public Cloud revenue was declining as customers contracted directly with hyperscale cloud platforms, the complaint contends
- No disclosure that a material portion of the Public Cloud infrastructure resale business was likely to be reduced, later quantified as a $125 million guidance cut
- No disclosure that colocation and basic hosting revenues in Private Cloud would be exited, later quantified as a $25 million cut
- Full-year 2026 guidance was reaffirmed in its entirety on May 7, 2026, with revenue, EBITDA, and cash flow outlook described as unchanged
- Revised guidance implies a (9)% to (5)% year-over-year revenue decline, versus prior guidance implying (3)% to 1%
Why Generic Warnings May Not Protect
"Generic risk factor language cannot substitute for disclosing specific, known problems that are already affecting a company's operations. Here, the complaint alleges that Rackspace described a broad business mix shift while specific exit decisions and their revenue consequences were allegedly not shared with investors." -- Joseph E. Levi, Esq.
The action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 in the United States District Court for the Southern District of New York against the Company and two officers.
Find out if you might qualify to recover losses or call (212) 363-7500.
ABOUT THE FIRM — For over two decades, Levi & Korsinsky has represented shareholders in securities class actions. Ranked in ISS Top 50 for seven consecutive years. Investors who suffered losses have until September 28, 2026 to seek appointment as lead plaintiff.
Frequently Asked Questions About the RXT Lawsuit
Q: What specific misstatements does the RXT lawsuit allege? A: The complaint alleges Rackspace Technology, Inc. made materially false or misleading statements regarding the impact of its enterprise AI buildout on the profitable Private Cloud segment, declining Public Cloud revenue as customers moved to direct hyperscaler contracts, and the sustainability of reaffirmed FY2026 guidance. When the July 9, 2026 strategic and financial update disclosed a $150 million revenue guidance reduction, the stock price declined sharply.
Q: What court was the RXT class action filed in? A: The case was filed in the United States District Court for the Southern District of New York.
Q: How much did RXT stock drop? A: Shares fell approximately 33.6%, a decline of $2.21 per share, after the Company disclosed a $150 million cut to full-year 2026 revenue guidance tied to exiting colocation, basic hosting, and low-margin Public Cloud resale revenue. Investors who purchased shares during the Class Period at artificially inflated prices and suffered losses may be eligible to seek compensation.
Q: What do RXT investors need to do right now? A: Gather brokerage records including purchase dates, share quantities, and prices paid. Contact Levi & Korsinsky for a free, no-obligation evaluation at jlevi@levikorsinsky.com or (212) 363-7500. No immediate action is required to remain eligible as an absent class member.
Q: What is a lead plaintiff and why does it matter? A: A lead plaintiff is the investor appointed by the court to represent the entire class. Lead plaintiffs are typically investors with the largest documented losses. Being appointed does not increase individual recovery but gives direct oversight of how the case is run.
Q: What if I already sold my RXT shares -- can I still recover losses? A: Yes. Eligibility is based on when you purchased, not whether you still hold the shares. Investors who bought during the Class Period and sold at a loss may still be eligible to participate.
Q: What does it cost me to participate? A: There is no upfront cost to contact the firm. Securities class actions are generally handled on a pure contingency basis. No upfront fees, no retainer, and no out-of-pocket costs. Any attorneys' fees and expenses awarded to class counsel are subject to court approval.
Q: What if I live outside the United States? A: U.S. securities class actions generally cover purchases on U.S. exchanges regardless of the investor's country of residence.
CONTACT:
Levi & Korsinsky, LLP
Joseph E. Levi, Esq.
Ed Korsinsky, Esq.
33 Whitehall Street, 27th Floor
New York, NY 10004
Tel: (212) 363-7500
Fax: (212) 363-7171
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