The IPO Buzz: In and Out of The Box

On March 24, 2014, Box filed with the U.S. Securities and Exchange Commission for an IPO to raise $250 million. Its timing was not the best. The fortunes of the cloud-based stocks had topped out and were beginning to tank. Consider the following:
  • Castlight Health (CSLT) was to fall 71 percent to close at $11.54 on May 5, 2014, DOWN from $39.80 on March 3, 2014.
  • 2U (QTWO) was to fall 68.9 percent to close at $10.03 on May 9, DOWN from $16.92 on March 21.
  • Veeva Systems (VEEV) was to fall 51.8 percent to close at $18.23 on May 9, DOWN from $37.80 on March 14.
  • Paylocity Holding (PCTY) was to fall 40.4 percent to close at $15.50 on May 8, DOWN from $26.01 on March 21.
Note: An IPO needs a strong stock market behind its sector in order to go public. A bear market for an IPO’s sector creates conditions as hostile as a grizzly rousted from a nap. That’s what happened to cloud-based providers from March through May.
The lights were flicked off and the party was over. Since then, the financial press has spilled a lot of ink about what was or was not happening with Box.
Sun Pops Through The Clouds
Fast forward to the present – it looks like the cloud-based providers’ lights may have been turned back on. Consider:
  • 2U closed Friday, Jan. 16, 2015, at $18.55, UP 84.9 percent from its May low
  • Veeva Systems closed Friday at $28.07, UP 54 percent from its May low.
  • Paylocity closed Friday at $23.06, UP 48.8 percent from its May low.
Reality check: Castlight closed Friday at $8.78, DOWN another 23.9 percent from its May low.
Not everybody made it back over the fence.
All About The Box
This brings us to Box – this week’s single offering.
Box, based in Los Altos, California, offers a cloud-based, mobile-optimized Enterprise Content Collaboration platform that lets organizations of all sizes easily and securely manage their content and collaborate internally and externally. Its platform is designed for users with the security, scalability and administrative controls required by IT departments. Box believes its paying business customers represent more than 40 percent of the Fortune 500 companies and 20 percent of Global 2000 companies, and its 25 million registered users are employees from 99 percent of the Fortune 500 companies, including companies in highly regulated industries such as healthcare and life sciences, telecommunications, energy and financial services. Its customers include Ameriprise Financial, Bechtel, Eli Lilly, Gap, Schneider Electric and Sunbelt Rentals. Its competitors include EMC, IBM, Microsoft, Dropbox and Google.
Bankers expect to price 12.5 million shares of Class A common stock at $11 to $13 each on Thursday evening. The IPO is set to trade Friday morning on the New York Stock Exchange.
For more information, please click here: (Box)
Looking to next week, the calendar has four IPOs expected to raise about $240 million. But more names could pop onto the calendar by the time that Monday, Jan. 26, rolls around.
Stay tuned.
Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinions.