Entering text into the input field will update the search result below

Box: KKR's Investment Is A Positive Long-Term Signal

Apr. 10, 2021 9:42 PM ETBox, Inc. (BOX)2 Comments
Gary Alexander profile picture
Gary Alexander


  • Shares of Box have cratered ~10% on news of a $500 million preferred stock investment led by KKR.
  • The markets took the news as a sign that Box won't be acquired anytime soon, which is the scenario that boosted the stock in March.
  • Even standalone, Box is a very attractive software company trading at <4x forward revenues.
  • Though growing only in the high single digits/low teens, Box's recurring revenue business and tremendous margin gains are valuable.
  • I do much more than just articles at Daily Tech Download: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

These days, value keeps getting harder and harder to find in a market that keeps chasing new all-time highs. The top end of the market - that is, the most expensively valued stocks - have taken a hit since late February, but even so, most tech stocks appear out of buying reach.

During the boom years for tech stocks, 2019 and 2020 especially, investors chased the most exciting narratives and pumped money into the hottest new IPOs. But now, with the markets seemingly jittery over valuations and all-time highs, investors are more willing to spring for the canaries in the coal mine.

Box (NYSE:BOX) is one such name. Box has been a dog in the stock market in the six years it has been public (the stock has gone virtually nowhere in those years, while most tech stocks have literally multiplied). A bit of hope sparked in March, when rumors circled that investor Starboard Value would push Box to sell itself. Those hopes were quickly dashed in April, when Box announced it was taking a $500 million convertible preferred stock investment from private equity giant KKR. The company is, in turn, using these funds to buy back stock. The markets took this move as a signal that a sale won't happen anytime soon, and Box shares have slid ~10% since:

In my view, the dip presents a fantastic buying opportunity in a perennially under-appreciated stock. Box may not be a great investment in a bull market, but in my view it's an excellent play for a "sideways market" (which is my base-case view for the rest of 2021) in which value stocks are getting the majority of the attention.

There are a number of reasons that Box is such an attractive play. First off, unlike most other deep-value stocks, Box

For a live pulse of how tech stock valuations are moving, as well as exclusive in-depth ideas and direct access to Gary Alexander, subscribe to the Daily Tech DownloadHighly curated focus list has consistently netted winning trades of 40%+.

This article was written by

Gary Alexander profile picture
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure: I am/we are long BOX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (2)

I say drop the box to create one company ? dead 💀 money for rest of year IMO .
As a customer, one thing I can add that hasn't been talked about publicly to my knowledge, I learned Box recently signed up with Gong to supercharge their sales productivity. For those not familiar, it is worth checking out on YouTube the technology Gong brings to sales teams. I think it could lead to a decent surprise in sales within the next 12-18 months.

I can also say that in my 6 years as a Box customer, I have never seen them more focused on properly marketing add-on features while I'm using the app. Their sales team proactively reaches out to me to be a resource and promotes upgrading to the next level based on our goals for the future. It all feels like a different environment than I'm used to with Box. My account reps presentation to me about the next level up was extremely professional and well prepared, showing me relevant user and account usage stats.

Box Sign will be big. I think it will encourage their cheapest business customers (like us) to upgrade to business plus (doubling our spend on Box) because it offers unlimited external users. PDF signature is so practical for all companies, even those with minimal collaboration needs with customers, partners, and vendors.

I implement cloud technology for a small business (~60 employees). We get the best bang for the buck from Box. It's recent integrations with Google Drive and the great out of the box Salesforce integration prove Box's viability as a neutral party in the ecosystem.

I'm bullish as a customer and investor. I also like Dropbox, by the way! Similar story and value proposition there too!
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

About BOX

SymbolLast Price% Chg
Market Cap
Yield (TTM)
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on BOX

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.