Professor Elam

Weekend Feb 15 2014

A TAMUSA finance team entered in a contest guessed Rackspace would hit $80. It did for three days. Today it is less than half that collapsing 19% in one day as the CEO resigned. 

RAX Two Year Weekly Chart with 13,34 Week Exponential Moving Averages

RAX is the perfect example of positive and then negative social mood. I have a serious interest in Socionomics.  Socionomics is the new predictive social science. Events happen as a result of endogenously generated social mood. The chart above is a great example. Social mood was positive right up to the $80 level. Then for some reason, someone pulled the socio switch, and the market turned negative. NOte tehe immediate drop to 55. a ;evel the stock has not seen since. The stock took another hit this past week when the CEO resigned and earnings were less than expected. But understand the firm still earns 5% on gross.

All the stories prior to February 2013 were seen as positive by the market. Example like 

Scrappy start up in San Antonio Bucks the High Tech Odds for Location.

Now however all news is seen as negative. No longer the scrappy start up but beleaguered by Amazon and Google and MSFT with with far more resources. Never Mind that MSFT with far more resources has botched every attempt at a tablet or mobile phone, the news is now all negative. 

At  55 times earnings RAX is no doubt pricey but things won't improve until the mood for this stock changes.