Please ensure Javascript is enabled for purposes of website accessibility

Why Box Inc. Shares Spiked 11% in April

By Chris Neiger - Updated May 7, 2018 at 10:04AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A hedge fund manager's recommendation to be long on Box lifted the company's share price.

What happened

Shares of Box Inc. (BOX 8.05%) popped 11.2% in April, according to data provided by S&P Global Market Intelligence, after Social Capital CEO Chamath Palihapitiya said that investors should consider buying Box's stock for its potential in artificial intelligence (AI).

The hedge fund manager was speaking at the Sohn Investment Conference toward the end of the month and said that Box's cloud content management services are being used by nearly 70% of Fortune 500 companies and that Box is an "incredibly cheap company."

Stock price chart on dark background.

Image source: Getty Images.

So what

"If you believe and if you care about artificial intelligence and its role in the world and your ability as a public market investor, what I would tell you is be long Amazon, be long Google, but, frankly, be long Box," Palihapitiya said at the conference.

Given that artificial intelligence is a hot topic in the tech space right now, and that Palihapitiya mentioned Box alongside Alphabet's Google and Amazon in the AI market, it's not all that surprising that the company's share price popped. He said that Box's AI services have the potential to organize lots of image, audio, and video data for companies.

Palihapitiya also noted that the fundamentals of Box's business are robust and continue to grow. He said that Box's core cloud product is already well established, that the company is successfully building trust in its services, and that it's expanding into new areas to drive revenue growth.

Now what

Box's share price has continued to climb in May and is already up nearly 9% since the beginning of the month. But it wasn't all that long ago that investors were upset with Box's direction.

The company reported its fourth-quarter results back in March, and despite mostly positive news in the quarter, investors didn't like management's first-quarter revenue guidance between $139 million and $140 million. Analysts are expecting $144.3 million. Consequently, that sent Box's share price tumbling 15% in March. It appears that some investors are swayed by any bit of news that comes along for Box, which means we're likely to see more volatility from the company's share price.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Box, Inc. Stock Quote
Box, Inc.
BOX
$26.71 (8.05%) $1.99

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.