Rackspace Technology arrives at its June 18 earnings print with options traders expressing the most bullish lean in months — a sharp contrast to where positioning stood just two weeks ago.
The clearest signal is in the options market. The put/call ratio has dropped to 0.63, more than 2.6 standard deviations below its 20-day average of 0.83 — the most call-heavy reading in recent memory and close to the 52-week low of 0.14. That kind of shift in a single week reflects genuine demand for upside exposure, not just a mechanical drift. The stock itself has provided context for that enthusiasm: RXT gained 5% on Tuesday alone and is up 33% on the week, closing at $6.21. That's a stock that has forced shorts to reassess.
The short-covering story, first documented here on June 10, has continued. Short interest has held broadly flat since the sharp June 9 collapse, sitting at roughly 6.9% of the free float — still meaningful, but well down from the 9%-plus levels that prevailed through most of May. Cost to borrow has fallen further, now at 3.1%, roughly a third of the ~9% peak seen in early May. Borrow availability remains comfortably above 90%, leaving no structural squeeze pressure in the lending pool. The short score of 66.6 is elevated in absolute terms but has edged lower all week, consistent with shorts retreating rather than pressing.
The bull and bear cases heading into the print are well-defined and genuinely diverge. Bulls point to Private Cloud bookings up 42% year-over-year, major wins in healthcare and banking, and a free cash flow profile that management says should improve meaningfully in the second half of the year. Bears counter that total revenue is still declining — management guided for roughly a 1% year-over-year fall at the midpoint — with the Private Cloud segment itself expected to contract around 3% even as bookings surge. Analysts have been cautious for some time: the most recent formal target changes are stale (RBC raised its target to $2.50 in February, still well below the current $6.21 price), and the consensus mean target of $4.83 now sits a full 22% below where the stock is trading. That gap is notable — it suggests the Street has not yet reprised its models to account for the extraordinary price recovery, leaving formal analyst opinion far behind market reality. Insider selling on June 4 — the CFO, a divisional president, and the CEO all reduced positions near $5.56–$5.92 — adds a note of caution from those closest to the business, though the values involved were relatively small.
The June 18 print is therefore a test of whether the bookings momentum translates into a credible inflection in revenue and cash flow — or whether the extraordinary 33% week-on-week price rally has simply run too far ahead of a business still working through structural decline.
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