It may have taken longer than anticipated, but Box's debut as a public company is off to a rousing start.
Shares of the cloud storage firm opened for trading at $22 Friday, a 57% pop from its $14 IPO price. The company sold 12.5 million shares to raise $175 million (underwriters led by Morgan Stanley, Credit Suisse and JPMorgan Chase have the option to purchase another 1.9 million shares to lift the total proceeds from the deal to just over $201 million).
Box kept climbing after its hot start, reaching a high of $24.73. Chief Executive Aaron Levie, who did not sell shares in the offering, owns a 3.7% stake of 4.1 million shares, worth about $57 million at the IPO price but rapidly growing.
The long-awaited offering comes after last year’s aborted attempt at a public debut, when Box got caught up in the early spring plunge in so-called “momentum stock” that cut deeply into the rich valuations enjoyed by many tech companies. (See “The Box IPO: What Went Wrong The First Time.”)
“Box moved just as multiples were plummeting,” says Paul Bard, director of research at IPO-focused Renaissance Capital. “It’s hard to go public in the face of contracting multiples in your sector; investors have a hard time benchmarking you.”
The hold-up, with Box burning through cash the whole time and mounting concerns about its expenses, prompted the company to tap the private markets for another round of funding over the summer, raising money at a $2.4 billion valuation.
Demand proved strong, as Box priced above its $11-$13 anticipated range, but the dollar increase was hardly excessive as Friday’s initial trading showed. Thursday’s offering gave Box a $1.7 billion market capitalization, making the IPO a down round in terms of valuation, but the gap quickly evaporated as the initial rally pushed Box’s market cap past $2.4 billion. Given the relatively small initial float — just 10.5% of the company was sold in the offering — the stock’s initial surge is understandable, but will bear watching as more shares come free from lock-up restrictions.
For all the investors who feared they might be catching a falling knife (and a money-losing one at that), there appeared to be plenty willing to bet they’re getting in cheaply buying Box at or near the valuation of its last public round..
Steve Schaefer, Forbes Staff
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