Box Shares Surge 66 Percent in First Trading Day

Written by DH Kass 1
January 23, 2015

Box got off to a roaring start in its first day of public trading, with shares opening at $14 but surging 66 percent to close at $23.23, spiking the company’s valuation from a modest $1.67 billion post-IPO to $2.7 billion.

Cloud storage provider Box (BOX) got off to a roaring start in its first day of public trading, with shares opening at $14 but surging 66 percent to close at $23.23, spiking the company’s valuation from a modest $1.67 billion post-IPO to $2.7 billion.

The lofty valuation exceeds the $2.4 billion the company was valued at following a $150 million capital infusion from private-equity firm TPG and hedge fund Coatue Management last summer.

Box’s IPO, the technology industry’s first of the new year, raised $175 million with the company selling 12.5 million share of Class A common stock in the offering. Box first disclosed its IPO prospectus last March but withdrew the offering owing to unfavorable market conditions.

“It’s a relief,” Box chief executive Aaron Levie told Bloomberg. “We have been going down this process for 10 months and we finally executed.”

Post IPO, Levie retained 3.4 percent of the company, worth about $57 million in the offering’s immediate aftermath but now valued at $92 million. Dylan Smith, Box chief financial officer, holds about 1.5 percent of the company, initially valued at about $25 million but now worth about $40 million.

Box has indicated it plans to allocate half of the IPO net proceeds to sales and marketing, product development and additional business expansion strategies. Box’s growth strategy spans increasing its customer base globally, gaining a strong presence among existing clients, targeting industry verticals, building a stronger channel partner network and expanding its platform ecosystem.

Although Box has yet to earn a profit in its 10-year history and competes in a difficult market, investors rode a huge wave of IT optimism to bet on the company’s prospects to edge out its rivals, which include heavyweights Microsoft (MSFT) and Google (GOOG) as well as smaller providers Dropbox–itself a future IPO candidate–and Carbonite (CARB).

For the nine months ended October 31, 2014, Box lost $121.5 million, a 3 percent improvement from the same period a year earlier, on an 80 percent increase in sales to $153.8 million.