BOX Equity Price

  • Authored on Oct 15, 2019 by Equity Research Analyst, Equity Research Firm
  • Posted on Oct 16, 2019 by Equity Research Analyst
At last year's Sohn conference, Social Capital pitched BOX Equity as a 10x in 10 years, based on the potential for it to become a marquee AI name, expanding its differentiation to win more users who pay more despite competition from over 100 online file storage vendors.  This September, amidst slowing growth, Starboard Value disclosed a stake and investors speculated on a shift from growth to efficiency focus with a lower target return over a shorter period.  What are the odds of a 10x in 10 years?  A 2x in 2 years?  As investors continue to disagree on the scope for differentiation and growth, Box reacted in its October analyst day by citing industry analysts' comparisons to competitors.

Industry Analysts on Box vs. Competitors

  • Authored on Oct 15, 2019 by Equity Research Analyst, Equity Research Firm
  • Posted on Oct 16, 2019 by Equity Research Analyst
By Quantifying this Story in Scenarios using the BPN Platform, we can explore how much BOX Equity share price upside there may be at multiple future horizons from changes in investors' expectations about the odds of different levels of differentiation for Box amongst different target customers, among other drivers. From the current price between $16 and $17, it's not as simple as a high-probability 10x or 2x. Based on what's priced in, despite a "cheap" revenue multiple, there is considerable downside should differentiation prove elusive, as we will see. But lots of upside if investors come to think that the Social Capital Sohn story is more probable.
  • Authored on Oct 15, 2019 by Equity Research Analyst, Equity Research Firm
  • Posted on Oct 16, 2019 by Equity Research Analyst
By Quantifying the Box Equity Story in Scenarios, we can explore the odds of combinations of its major drivers, from the odds that Box becomes a commodity for its Current Paying Users, to the odds it dominates for not only them but more than Dropbox's hundreds of millions of registered users, to how those odds affect customer acquisition cost and lifetime value. Revenue multiple and valuation at a horizon like year-end 2021 can be influenced heavily by investors' outlook at year-end 2021 for long-term for these drivers. In the table below, explore the odds of year-end 2021 stock prices, and the combinations that influence them, by dragging the dot at the bottom to toggle some of our 100 cases.
  • Authored and posted on Nov 11, 2019 by Peter Moore, Bullet Point Network, L.P.
Is BOX Equity "cheap" at 3.5x forward revenue, while some comparables trade at 5x or more? Well, that depends on whether its price will trade at a higher or lower revenue in the future, say in 1 year, 2 years, or 5 years. And as it does today, its multiple then may depend on the outlook at that time for peak economics, which may drive the outlook for cash production over the long-term. In the chart below, hover over 1 of the 100 cases in any of the 4 time horizons to see the outlook at that time. Click a case to zero in on it. And select horizons at the bottom to zero in on them too. Explore what could drive revenue multiple to, for example, above our 90th percentile of 5.2x in 5 years or below our 10th percentile of 1.0x. If you are reading this on a smart phone, flipping to landscape mode will help.
  • Authored on Apr 23, 2018 by Chamath Palihapitiya, Social Capital LP
  • Posted on Feb 18, 2020 by Peter Moore, Bullet Point Network, L.P.
And so we get to our 2018 pick for Ira Sohn, which is Box. So why Box? For a bunch of reasons. The first and foremost is that they sit on top of an enormous amount of [artificial intelligence] R&D that these internet giants [Amazon and Google] are already doing . . . And they do three very simple basic applications with all of this infrastructure that has been built for them. They give companies the ability to add intelligence to imagery, to audio, and to video . . . When you layer this AI-led digital transformation, what we think is going to happen, is very similar to the last decade, we’re going to see, on average, 20-25% compounding in their revenue, we’re going to see an expansion of all of these verticals, we’re going to see an expansion of ARPU driving value-added services, and we think we’re going to see even a modest multiple expansion over the next 5 to 10 years, and when that happens, what you see is a business that can be extremely valuable. Box can be a 10x in 10 years.
  • Authored on Oct 24, 2019 by Jeff Smith, Starboard Value LP
  • Posted on Feb 18, 2020 by Peter Moore, Bullet Point Network, L.P.
The issue comes when you’re promising more growth than you’re achieving and you’re not able to pivot and balance that profitability and instead, as you may see in Box, you instead continue to spend more and more dollars chasing that growth. Those companies that are reaching that level really need to also understand how to balance profitability.
  • Authored and posted on Feb 18, 2020 by Peter Moore, Bullet Point Network, L.P.
At the 2018 Sohn conference, Social Capital pitched BOX Equity as a 10x in 10 years, based on the potential for it to become a marquee AI name, expanding its differentiation to win more users who pay more despite competition from over 100 online file storage vendors.  Last September, amidst slowing growth, Starboard Value disclosed a stake and investors speculated on a shift from growth to efficiency focus with a lower target return over a shorter period.  What are the odds of a 10x in 10 years?  A 2x in 2 years?  As investors continue to disagree on the scope for differentiation and growth, Box reacted in its October analyst day by citing industry analysts' comparisons to competitors.

Industry Analysts on Box vs. Competitors