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Why Box Stock Was Up 24% in May

By Jon Quast – Jun 5, 2020 at 6:27AM

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Investors expected Box to be a big beneficiary of a growing mobile workforce, but first-quarter results sent mixed signals.

What happened

Shares of Box (BOX -0.93%) rose 23.8% in May, according to data provided by S&P Global Market Intelligence. It wasn't until late in the month that it reported earnings. For most of the month, it simply rode higher on investors' preference for work-from-home stocks.

In this turbulent 2020, Box stock has managed to rise; gains in May pushed it into positive territory.

BOX Chart

BOX data by YCharts

So what

In an April 24 tweet, Box CEO Aaron Levie said, "At Box, we're working with enterprises that are accelerating digital initiatives that would have taken years and are now happening in a matter of days." The COVID-19 pandemic forced businesses to creatively adapt to a remote workforce, and investors looked for stocks like Box benefiting from the accelerating trend.

Box provides secure cloud storage for enterprises, but it increasingly offers add-on services. New add-on services launched in early May, underscoring Box's positioning for a mobile workforce. One new feature is called Annotations, allowing Box users to add comments to over 100 different file types. This is useful when multiple workers in multiple places are working on the same file. The company also increased its integration with popular video-communication tool Zoom.

For most of May, Wall Street bet Box would report a solid quarter. Towards the end of the month, the speculation finally ended when Box reported results for the first quarter of fiscal 2021. The company generated revenue of $184 million, good for 13% growth year over year, but merely inline with guidance.

Box's bottom-line results were more complicated. Net loss per share by generally accepted accounting principles (GAAP) was better than expected, while non-GAAP earnings per share missed guidance. But it was free-cash-flow positive. 

A man in a suit draws an upward arrow on a transparent touchscreen.

Image source: Getty Images.

Now what

If there was ever a time for this technology stock to shine, it's right now. In Box's earnings call, management spoke of big customer wins. However, its revenue guidance for the year sends a different message. Previously the company guided for full-year fiscal 2021 revenue of $771 million to $777 million. However, in Q1 it lowered its revenue guidance to be between $760 million and $768 million. 

It wasn't surprising to see Box stock rise throughout May with the work-from-home opportunity. But it's also not surprising to see the stock trend downward now that its lowered full-year guidance.

Jon Quast owns shares of Box. The Motley Fool owns shares of and recommends Box and Zoom Video Communications and recommends the following options: short August 2020 $130 calls on Zoom Video Communications. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Box, Inc. Stock Quote
Box, Inc.
$24.39 (-0.93%) $0.23
Zoom Video Communications Stock Quote
Zoom Video Communications
$73.59 (-1.18%) $0.88

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