Rackspace IPO Settles for Half Its Hoped-For Price

After filing for an IPO last April in which it hoped to raise $400 million, Web hosting provider (and cloud-computing aspirant) Rackspace finally priced its IPO last night at $12.50 a share. That would have brought in $187.5 million, or half what it was hoping for. But it opened this morning at $10 (ticker: RAX). It’s been been going up since then to about $11.

And Rackspace is a solid company financially. But in this market, any IPO is a sign of hope (there were no VC-backed IPOs last quarter). Rackspace backed off from an IPO once before, in 2000. It’s been champing at the bit to go public for a long time. It looks like the shares are trading up. Let’s see where they end the day.

Disclosure:  Rackspace is a TechCrunch advertiser.

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Comments

[Raj Sargule:]

It closed at 10.90
If its true that an IPO is normally priced at about 10-15% discount to cover some downside for initial investors, then given the $12.5 final price, it should have closed atleast at 12.5.
The current market/economic situation could have contributed to its lower than expected closing. But shouldn't that have been considered while deciding the final price?
Seems like its almost impossible for anyone to feel the market pulse.

2008 Aug 12 09:41 PM