Online Storage Company Box Has Strong Debut in First Day of Trading(dealbook.nytimes.com)
dealbook.nytimes.com
Online Storage Company Box Has Strong Debut in First Day of Trading
http://dealbook.nytimes.com/2015/01/23/online-storage-company-box-has-strong-debut-in-first-day-of-trading/?_r=1
6 comments
That 'analyis', i.e., “Box Will Hit $1 Billion In Revenues Before You Know It”, is the type of wild claim that people will look back years from now as a great example of the irrational exuberance of this age.
I don't know man. They're in the same industry as other large enterprise vendors. If their product works, and it costs more than $15 a user, and they have many 10k user companies, they could see that sort of revenue with 7k customers. I think thats totally doable. There are 600k enterprises with over 10k users.
http://www.census.gov/econ/smallbus.html
http://www.census.gov/econ/smallbus.html
If anyone is interested in how much the VC's or the CEO made on their investments in Box check out EquityZen's Infographic here: https://equityzen.com/path-to-ipo/box/?utm_source=hackernews...
Love the data. Don't like the &utm_source=hackernews&utm_medium=comment&utm_campaign=box part of the URL. Is commenting really a campaign and worth tracking?
In Firefox, you can automatically strip utm[0], but even more fun - there's a utm poisoner for Chrome[1] that replaces the values with garbage.
[0] https://addons.mozilla.org/en-us/firefox/addon/au-revoir-utm...
[1] https://chrome.google.com/webstore/detail/utm-mangler/ngddln...
[0] https://addons.mozilla.org/en-us/firefox/addon/au-revoir-utm...
[1] https://chrome.google.com/webstore/detail/utm-mangler/ngddln...
I like tracking everything. Just curious, why does it bother you?
Curious: How many clicks did you get?
can't this be tracked by referer links?
The referrers get stripped when you come from an https site like HN, so you actually can't
Presumably Levie has a lockup period...
I'm always confused when stories like these are spun as a "strong debut" rather than saying Box left a lot of value on the table. Why do we care more about the people who've held the stock for < 1 day than the capitalization of the company?
It's understood that a tech company releases a small minority of shares at IPO and follows up with a secondary in a year or so. Someone else observed that they raised only a year's worth of money and from what I've read, they don't know when they'll be profitable, so it's quite obvious that they're going to do a secondary and that will be when they really raise some capital.
It's still a lot of cash left on the table. Why aren't dutch auctions more common in IPOs?
Because the financial companies that control everything on Wall St. hate them. Box isn't a very powerful company - they're no Google - and can't easily go against the grain. Box desperately needed that IPO, they're burning very large sums of red ink.
The amount of shares on offer is typically only a fraction of all outstanding shares. So underpricing the IPO shares isn't such a huge deal if company insiders who are under sales lockups hold many times more shares. It might actually be beneficial to company execs if they wish to offload their stock after escrow ends.
Big and pleasant surprise here as a boxer. I was hoping for $16.50+. Ya, we probably left some $$ on the table but keep in mind, we had a rough patch there this summer and couldn't easily afford more turmoil.
Now time to buckle up and go for it! I'm confident.
Now time to buckle up and go for it! I'm confident.
The dilution image made by EquityZen is interesting:
https://pbs.twimg.com/media/B8DCNDoCcAAU3jM.png:large
Those last two major investors lost a lot of money.
Is that usual? Do investors usually come in for the long-term even though they faced an IPO that would lose them a chunk of the value?
Those last two major investors lost a lot of money.
Is that usual? Do investors usually come in for the long-term even though they faced an IPO that would lose them a chunk of the value?
IIRC, the last two investors had some sort of deal where if the IPO was priced at under $20, Box paid them some sort of penalty. (Maybe someone here remembers the details better than me.)
I'm sure they watched their backs on the paperwork and that any gain like the one the stock is currently seeing is a win for them.
As sbisker said, the last round investors had preference protection in the form of a ratchet (i.e. they got some multiple of their shares because the IPO came in under a certain price). EquityZen seems to have updated their piece
>Those last two major investors lost a lot of money.
Depends, actually, on how much of their stock they sold at the IPO price. Box is already trading above the last round valuation even though the IPO was priced below it.
Depends, actually, on how much of their stock they sold at the IPO price. Box is already trading above the last round valuation even though the IPO was priced below it.
Well its such a late stage investment at a very high valuation. Either they did it for the portfolio logo, or they just want to make a safer investment that will cap out at 2x or 3x at best.
Who is buying this stock?! A company that burns through a TREMENDOUS amount of cash raises enough for just about a year's worth of operations, meaning that they will almost certainly dilute their stock against next year just to pay for cost of doing business. Their future consists of insisting that they aren't "just online storage", and competing on pricing that is trending towards 0.
I'm not invested in this company one way or another, but it really baffles me that people think the company is worth investing in. I'm sure I'm missing something, since I haven't dug deeply into their financials or anything.
I'm not invested in this company one way or another, but it really baffles me that people think the company is worth investing in. I'm sure I'm missing something, since I haven't dug deeply into their financials or anything.
>Who is buying this stock?! and
>I haven't dug deeply into their financials or anything.
should be mutually exclusive, don't you think? If you haven't looked at their financials or anything, how do you know whether it is a good investment or not? You can't just look at 'macro-trends' and determine if individual companies are a buy or not.
e.g. since 1970s, cigarette industry has been in a steady volume decline. Guess which stock has been (by far) the best performing stock during since that period? Yep, Philip Morris (which recently split into Altria and Philip Morris)
>I haven't dug deeply into their financials or anything.
should be mutually exclusive, don't you think? If you haven't looked at their financials or anything, how do you know whether it is a good investment or not? You can't just look at 'macro-trends' and determine if individual companies are a buy or not.
e.g. since 1970s, cigarette industry has been in a steady volume decline. Guess which stock has been (by far) the best performing stock during since that period? Yep, Philip Morris (which recently split into Altria and Philip Morris)
I'm not an expert, but by all accounts the financials for them are somewhat grim: http://www.forbes.com/sites/benkepes/2014/03/24/boxs-ipo-rev... They're spending more in sales than they're making back in revenue (nevermind profit). Building a company around spending $2 to make $1 isn't good for the long term (ask Groupon how that worked out for them).
> (ask Groupon how that worked out for them).
They're a $5B company four years after their IPO and are selling ~$2.5B annually.. not the failure that people keep representing.
They're a $5B company four years after their IPO and are selling ~$2.5B annually.. not the failure that people keep representing.
Their revenue is flat and they make no profits. That's pretty terrible in this market.
http://finance.yahoo.com/q/is?s=GRPN
> since 1970s, cigarette industry has been in a steady volume decline
In the US - not globally. The tobacco market is growing and sales are increasing on a worldwide basis. As developed countries stop smoking, developing countries start - and developing countries often have far larger populations.
In the US - not globally. The tobacco market is growing and sales are increasing on a worldwide basis. As developed countries stop smoking, developing countries start - and developing countries often have far larger populations.
And the product is taxed heavily in the USA which gives the manufacturers cover for price increases. Tobacco is really profitable even in the US.
Plus the eCig market has given them new growth prospects.
Plus the eCig market has given them new growth prospects.
a company feeding a strong addiction is a good long term bet, unlike box
Traders most likely. They only sold around 10% of the shares in the IPO creating a fairly low float. Low-float stocks are prone to explosive moves which was likely what the underwriters wanted. If the stock can gain momentum and drift higher over the comings months, it will be much easier to place a larger secondary and collect the money the company needs.
Thanks - explains to me more fully why companies who IPO want a "large pop" - it's not just to please the underwriters and early investors or visibility.
For those that wish to read the financials for Box as I did:
http://www.nasdaq.com/markets/ipos/company/box-inc-718252-74...
http://www.nasdaq.com/markets/ipos/company/box-inc-718252-74...
>Who is buying this stock?!
Speculators that bought and sold to make a profit today.
I bought a few hundred shares, sold about half of them (guaranteeing a profit even if the other half crashes to 0) and am holding the other half as either a long term investment or waiting for the next pump and dump.
Speculators that bought and sold to make a profit today.
I bought a few hundred shares, sold about half of them (guaranteeing a profit even if the other half crashes to 0) and am holding the other half as either a long term investment or waiting for the next pump and dump.
Remember that it is very hard to short an IPO so the market pressure is mostly up (even more so than normal). More interestingly will be what happens in coming weeks.
It can become another Jive software, which has traversed from 16 to 24 (in 3 months after IPO), 6 now.
They are not selling file storage, they are selling enterprise content management.
But their ECM offering is basically Dropbox++ rather than Opentext/Hyland/Alfresco/etc. They don't have nearly the feature set of the big guys, and there aren't many enterprises particularly interested in ECM (the "M" part) who would take Box seriously. They might as a simple cloud storage platform, but only if they need something like that and haven't already got something similar from Google or Microsoft.
(I'm writing this as the person responsible for ECM & Google Apps at a large enterprise. We looked at Box and were non-plused.)
(I'm writing this as the person responsible for ECM & Google Apps at a large enterprise. We looked at Box and were non-plused.)
And you were plused by Opentext/Hyland/Alfresco? just curious...
Congrats to these guys, nice debut.
>Who is buying this stock?
Not me, but that's what makes a market.
>Who is buying this stock?
Not me, but that's what makes a market.
..box it and they will come
Also, one thing people absolutely do not understand about Box (or they underestimate this aspect of Box's business): they are an 1) enterprise 2) SaaS company that 3) targets slow-moving, low-churn departments. Look, for example, this analysis by SaaStr: http://www.saastr.com/2014/12/18/saastr-on-techcrunch-box-wi...