(Bloomberg) -- Rackspace Technology Inc., the cloud-service provider backed by Apollo Global Management Inc., fell 20% at the opening bell in its trading debut after raising $704 million in a U.S. initial public offering priced at the bottom of the marketed range.
That's the worst showing on a U.S. exchange this year for an IPO raising $100 million or more, according to data compiled by Bloomberg.
Rackspace shares opened Wednesday at $16.85 after the company sold 33.5 million for $21 each on Tuesday. They were down 19% to $17 at 1:07 p.m. in New York trading.
The company has a market value of about $3.4 billion based on the outstanding shares listed in its filings with the U.S. Securities and Exchange Commission. Including debt, cash and other considerations, the company had an enterprise value of $7.6 billion, people familiar with the matter said before Wednesday's trading.
When it was taken private by Apollo in 2016, the company was valued at $4.3 billion including debt at the time.
The San Antonio, Texas-based company estimates its net loss for the second quarter will be $24 million to $44 million on revenue of $655 million to $657 million, its listing documents show.
Rackspace designs and operates its customers' cloud platforms. It has more than 120,000 customers across 120 countries and about 6,800 employees, which the company calls “Rackers.”
Chief Executive Officer Kevin Jones said in an interview that one of the biggest changes since Apollo acquired Rackspace is that it no longer competes with Amazon Web Services, Microsoft and Google.
“Now they're our biggest partner,” Jones said. “We look at them as our sales team and research and development team.”
Jones said he was pleased with how the IPO process has gone, saying innovation in the technology industry is what's driving valuation.
Investors buying Rackspace shares include BlackRock Inc., Fidelity and Norges Bank Investment Management, according to a person with knowledge of the matter. Representatives for BlackRock, Fidelity and Norges Bank declined to comment.
Apollo will retain 65.1% of the voting power in Rackspace after the listing, the filings show.
Goldman Sachs Group Inc., Citigroup Inc. and JPMorgan Chase & Co. led the offering. Apollo Global Securities, an affiliate of the private equity firm that backs Rackspace, is also an underwriter. Rackspace's shares are trading on the Nasdaq Global Select Market under the symbol RXT.
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