Is Box Stock a Disappointment?

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By Jacob Maslow

Cloud computersAfter investors were originally told that the cloud storage company Box’s IPO price would be around $14, the company’s stock debuted at $20.20. This was quite a dramatic entrance for a commodity cloud-based storage company. At that price, the company’s current valuation is around $1.6 billion. Its IPO, by all considerations, appears to be successful. The company successfully raised $175 million on the back of $12.5 million shares sold.

Unfortunately, after much of the hoopla regarding its initial debut has died down, the stock has been trading below its IPO debut price. It’s anyone’s guess whether Box (NYSE:BOX) will copy Facebook’s stock performance or not. If you remember, Facebook (NASDAQ:FB) opened to a lot of hype, and its stock experienced a nice little surge only to drop like a rock for several months. Indeed, at its lowest point, Facebook’s shares were priced below $18.

Now, Facebook’s stock performance of course is another story. Will Box follow? I don’t think so. I’d like it to be a Cinderella story but considering its market positioning, and the fact that it has some powerful competitors in the commodity cloud storage space, it’s going to look like it has its work cut out for it. This doesn’t mean that Box can’t claw its way to the top of its particular market segment, but it’s going to be rough. Why? Amazon and Microsoft dominate the commodity end of the cloud storage industry. Moreover, they’re cutting prices. It’s going to be interesting how Box can compete in an increasingly cheap cloud storage market.

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