Is Box Inc. (NYSE:BOX) Due For A Bounce Back After Earnings Beat ?

Shares of Box Inc. (NYSE:BOX) jumped by more than 3% on the cloud storage company reporting record revenue and earnings beat in Q3. The impressive earnings report helped avert a further slide in the stock.

Box Price Analysis

The cloud storage company has underperformed the overall sector has lost more than 30% in market value since June. Amidst the bounce back, the stock is still engulfed in a bear trend and flirting with a critical support level. The sell-off that begun mid this year faces immediate support at the $16 a share level. A sell-off followed by a close below the critical support level could give short sellers a reason to continue pushing the stock lower, in continuation of the short-term bear trend. After the recent bounce back, Box faces immediate resistance at the $20 a share level. A rally-followed by a close above the critical resistance level could give bulls a reason to continue pushing the stock higher.

If recent developments are anything to go by, then Box could as well continue climbing high as underlying fundamentals have improved significantly. Shares of the company continue to show volatility an indication that investors remain confident about the company’s growth prospects especially after the recent earnings beat.

Q3 Earnings Report

Box saw its customer base grow to 90,000 in the third quarter, leading to record revenues of $155.9 million. Analysts were expecting the company to report revenues of $154.6 million in the quarter. The cloud content management and file sharing services provider saw its net loss narrow down to ($40.2) million or 28 cents a share, from ($42.9) million or 32 cents a share a year earlier. As per Chief Executive Officer Aaron Levee “From Medtronic to Coca-Cola to Eli Lilly, large enterprises are deciding to choose Box. I think where we could have done better is in Europe, we still have seen some markets not all perform up to the level that we like”. The company generated most of its growth in the quarter from deals worth more than $100,000 attesting to strong demand. Attach rate for add-on products increased to over 80% of the deals.

Q4-Full Year Outlook

Buoyed by the third quarter performance, Box has increased its revenue guidance for 2018. The company expects Q4 revenue to range between $163.5 million and $164.5 million. The cloud storage firm is also projecting a profit in the quarter, of between 2 cents and 3 cents a share. The company expects full-year revenue to range between $608.2 million and $609.2 million. Full-year net loss, on the other hand, should average between 15 cents and 16cents a share.

Bottom Line

Investors can heave a sigh of relief as the earnings report indicate the company is doing extremely well when it comes to operational efficiency. Record revenues at the back of declining net loss is a sign that the company is firing on all cylinders as it seeks to become cash flow positive. While the stock has lost a substantial amount of market value over the past few months, the same has come on the broader industry coming under pressure. The broader industry has come under pressure on widening rifts between the U.S and China in what has come to be known as a trade war. Tech companies also took a significant hit on concerns rising interest rates could hurt the economy and reduce consumers spending power. Box underperformance is not in any way related to fundamental change. That said the stock should bounce back on calmness streaming back to the industry, as Box shares were up by more than 15% before a sell-off wave gripped the sector.

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