Box Inc. (BOX) Soars on First Day of Trading

Shares of Box Inc. (BOX) were trading down -0.41 or -1.76 percent to $22.82 in Monday's premarket before the beginning of the stock's second day of trading as a listed stock. The company had their initial public offering on Friday gaining sharply after the stock was originally offered at $14 per share. Box Inc. stock closed $23.23 per share, up +9.23 or +65.93 percent in Friday's regular trading session.

Los Altos, California based Box Inc. is a company that specializes in personal cloud content management and file sharing online.
The company was started in Mercer Island, Washington by Aaron Levie and Dylan Smith in 2005 and offers their mobile services for devices running iOS, Android, WebOS, Blackberry and Windows mobile. The company operates on a "feemium model, offering new clients up to 10 gigabytes of storage on the cloud free of charge. In addition, the company offers three types of accounts: Business, Enterprise and Personal. Its larger clients include General Electric (GE) and Procter & Gamble (PG).

The company had originally priced its initial offering at the $11 to $13 range during their promotional road show earlier this month, but settled on a $14 price just before the offering. The company sold 12.5 million shares and raised $175 million from public investors giving underwriters options to buy another $26 million, making the offering worth a total of $201 million.

In an interview after the offering, Box Inc. founder and Chief Executive Officer, Aaron Levie stated that, "Some of the misunderstanding of our business, and part of this is due to us being in a quiet period for eight or nine months, was that we are a storage company. We're not. We are a software company with 80% gross margins that sells per seat. I think there was some initial confusion over that, and not understanding that storage is part of our infrastructure as opposed to something we sell. Users get unlimited storage, and pay us for our apps. That was already understood by people who have followed our company the closest, but not by people who were new to it.

While the initial offering was a huge success for the company having delayed the offering for months, Box is still operating at a loss. Its earnings per share show a loss of -$1.25 in the trailing twelve months due primarily to sales and marketing expenses.

The initial offering, the first major IPO of 2015 bodes well for other tech companies such as Pinterest which will be having its initial offering later this year. Despite the company being in the red, its rate of growth and market share justify the price according to some analysts.

This morning's action indicate the stock's run may not be over, having been down over three percent when premarket trading opened, Box stock is already up almost two percent as of this writing. The next two weeks of trading will be key for the company. If Box stock can retain its gains, the stock will trade with a premium possibly until after the company begins showing a profit.

Other News About Box
As Box prepares IPO, cloud computing gets crowded
Company has some heavy competition such as Google, Microsoft and EMC.
Box Almost Doubles Revenue as Startup Weighs IPO Timing
Company reported revenue surge last month ahead of its offering.

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Published on Jan 26, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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