Box officially priced 12.5 million shares at $14 each on Thursday night; the shares opened for trading this morning at $20.20 before climbing to $21.66 within minutes of the opening bell. According to Recode, Box raised $175 million in the offering, led by Morgan Stanley, Credit Suisse and J.P. Morgan. The offering values Box at about $1.7 billion.
Draper Fisher Jurvetson, Box’s largest stakeholder, will own a 19 percent stake in the company valued at about $320 million as of Thursday’s official price. Box founder and CEO Aaron Levie owns 3.4 percent of the shares, worth $57.3 million.
Congratulatory notes came in from all corners of the Internet:
Congratulations to @levie and the Box team on their IPO and for creating a great company!
— Tim Cook (@tim_cook) January 23, 2015
— Jim Cramer (@jimcramer) January 23, 2015
But the time for celebrating may be short-lived. As Mashable notes, Box is not just competing with similar sharing services like Dropbox, but also against giants like Apple and Microsoft who are also looking to add their own cloud storage capabilities. As Box itself admitted in its filing, the market it operates in is “intensely competitive.” And there’s more:
Box is not yet profitable, as it continues to invest heavily in business operations and marketing, though that loss has narrowed as Box has eased up on marketing spending. The company posted a net loss of $45.4 million in the third quarter of 2014 on revenue of just more than $57 million.
VentureBeat points out that the same market conditions that helped Box could also help its competitors file for IPOs sooner as well. There are other risks, too: now that the company has gone public, it faces the possibility of a brain drain as employee shares vest and they cash in on potential gains. Not to mention the risks for Levie himself if he’s unable to generate strong financials.
What’s Next for Box?
Thanks to a set of new features, like Box Notes and Box WorkFlow, Box might be able to overcome these challenges and eventually become profitable. VentureBeat suggests that as Box sells these and other features to more businesses, other vendors could follow suit over time, potentially making file sharing into a full-blown commodity.
Led by 29-year-old Levie, Box offers customers 10 GB of free online storage before charging for additional space. Levie launched the company soon after dropping out of school during his junior year at the University of Southern California. He famously secured an initial seed round from celebrity VC Mark Cuban after convincing him, via cold email, to write a check for $350,000. The company claims about 32 million users today.
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