What happened

Shares of Box, Inc. (NYSE:BOX) fell 11.5% in August, according to data from S&P Global Market Intelligence. The enterprise-software company was caught up in the overall tech sector sell-off early in the month, then finished August with volatile price swings after it reported earnings on August 28. It all added up to a down month, with the stock actually finishing August below the lows set in last December's epic market sell-off.

However, in early September, things have reversed in a big way, as activist investor Starboard Ventures took a large stake in the company.

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So what

In its second fiscal quarter, Box grew revenue 16%, and adjusted (non-GAAP) operating margins swung to a slight profit, up from a loss in the year-ago quarter. While Box's revenue and earnings per share (EPS) surpassed analyst expectations, that optimism soon turned to pessimism as more numbers came to light.

For instance, while revenue was up 16%, deferred revenue was up only 10%, and billings were up only 6%. While they can be imperfect indicators due to timing issues, deferred revenue and billings tend to count prepaid contracts and are thus somewhat leading indicators for future revenue. Their lower numbers may mean that Box's top line, which has already been decelerating, may decelerate even further.

These figures, along with somewhat tepid forward guidance, were followed by analyst downgrades the next day.

Now what

On September 3, activist investor Starboard Value disclosed a 7.5% stake in Box. Its disclosure showed Starboard had purchased shares throughout the month, beginning on July 31 and continuing through August 30. The news has sent Box shares back up above where they were at the beginning of August, so the 11.5% drop has been erased.

Starboard's disclosures said the company believes shares are undervalued, yet many think that the activist will try to force a sale of the company to another large cloud company. Either way, prospects for the stock have brightened since the end of August.

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