Why Box, Inc. Stock Lost 15% in March

MarketsMotley Fool

What happened

Shares of cloud-storage specialist Box, Inc. (NYSE: BOX) slid last month after the company offered a disappointing forecast in its fourth-quarter earnings report. As a result, the stock fell 15% during March, according to data from S&P Global Market Intelligence.

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As the chart below shows, shares plunged at the beginning of the month on the earnings report, but recovered some of those losses before falling on a successful IPO by rival Dropbox (NASDAQ: DBX).

So what

Box delivered solid revenue growth in the period, as sales increased 24%, to $136.7 million, matching estimates. Billings were up 28%, to $204.6 million.

Deferred revenue grew 33%, to $320.9 million. On the bottom line, the company reported an adjusted loss per share of $0.06, better than a loss of $0.10 a year ago and topping analyst expectations for a loss of $0.08.

CEO Aaron Levie touted the company's achievements during 2017, saying, "We continued to pioneer the category of cloud content management by adding new innovations in workflow, security, compliance, and machine learning technology." However, the stock still fell 23.3% on March 1 on weaker-than-expected guidance, which we'll get to below.

Box shares gradually recovered some of those losses over the course of the month, but then fell again after rival Dropbox saw its shares soar in its IPO on March 23.

Now what

In its guidance for the year, Box called for revenue of $602 million to $608 million under new revenue recognition principles, or $613 million to $619 million under the old ones. Under the new principles, it sees a full-year adjusted loss per share of $0.20 to $0.16, or $0.28 to $0.24 under the old standard. Those forecasts compared to analyst estimates at revenue of $625.7 million and an adjusted loss per share of $0.20.

With more competition on the way, Box may struggle to reach profitability. Investors are right to be wary after the latest round of guidance.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.