Shares of Box (BOX -3.07%) spiked as much as 17% today after Reuters reported that activist investor Starboard Value is advocating for the company to sell itself. As of 1:15 p.m. EDT, the stock had given back some of those gains and was up 7%.
Starboard Value is disappointed with Box's share performance in recent years and is now pressuring the company to explore a potential sale, according to the report. The activist institution had accumulated a 7.5% stake in Box in late 2019. A few days after that position was disclosed in regulatory filings, Box and Starboard announced an agreement designed to drive revenue growth and margin expansion. Starboard secured three board seats, and Box formed an operating committee to help improve operating performance.
While Box has made progress in terms of revenue growth and improved profitability -- revenue increased 8% last quarter and adjusted operating margin expanded by 11 percentage points -- the stock has lagged the broader market for years. Shares have gained 5% over the past three years, compared to the S&P 500's 45% advance.
Box has had talks with other companies, as well as private equity firms, Reuters says, but no deal has been finalized and negotiations could fall through. Starboard has reportedly been frustrated that Box did not execute well to benefit from the remote work trend catalyzed by the COVID-19 pandemic, which boosted demand for many tech companies offering cloud services.