Why Box (BOX) Stock Is Nosediving

Radek Strnad /
2023/08/30 10:35 am EDT

What Happened:

Shares of cloud content storage and management platform Box (NYSE:BOX) fell 12.3% in the morning session after the company reported second quarter results that missed analysts' expectations for billings, though revenue and earnings per share (EPS) came in ahead. Looking ahead, revenue and non-GAAP operating profit guidance for next quarter underwhelmed. Full-year revenue guidance was slightly lowered and also missed Wall Street's estimates. Lastly, non-GAAP operating profit for the full year was also below expectations. 

Management hinted at the drivers of the weaker near-term outlook, adding that "While ongoing economic factors have affected our customers' IT budgets and put pressure on our projected fiscal 2024 growth rate, we remain committed to our long-term revenue growth targets as we continue to drive gross margin and operating margin expansion in FY24 and beyond." Overall, the results could have been better. 

Following the results, Craig-Hallum analyst Chad Bennett downgraded the stock's rating from Buy to Hold (Neutral).

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Box? Access our full analysis report here, it's free.

What is the market telling us:

Box's shares are not very volatile than the market average and over the last year have had only 7 moves greater than 5%. But moves this big are very rare even for Box and that is indicating to us that this news had a significant impact on the market's perception of the business.

Box is down 11.5% since the beginning of the year, and at $27.74 per share it is trading 20% below its 52-week high of $34.68 from February 2023. Investors who bought $1,000 worth of Box's shares 5 years ago would now be looking at an investment worth $1,160.

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