Shares of Box Inc (BOX) jumped to the top of many investors list when famed investor Chamath Palihapitiya, the CEO of Social Capital and known for his investment calls, named the company as his best idea at the Sohn Conference back in April.
Shares of the cloud base storage company are up by roughly 22.3 percent in 2018, and nearly 39 percent over the past year. However, most of the big gains came after the Sohn conference, jumping by 25 percent. Before the big reveal at the conference, shares had been down about 2.25 percent.
Buying Up Shares
It turns out Chamath Palihapitiya wasn’t the only investor that thought it was a great stock pick because institutions were adding shares of the stock to their portfolios during the first quarter as well. Box was added to the WhaleWisdom 100 Index in the middle of May, due to the strong appetite for the stock among institutions.
During the first quarter, the number of aggregate 13F shares rose by over 8 percent to 107.4 million from 99.3 million at the end of the fourth quarter. 40 institutions started new positions, while 80 added to existing ones. Meanwhile, only 61 reduced their stakes, while 37 closed their holdings completely. Interestingly, the number of shares held by hedge funds, declined by nearly 11 percent, with the total aggregate 13F shares falling to 22.4 million shares, from 25.71 million shares the prior quarter.
A Bet on the Future
To be bullish on the stock is betting on the future of the company. Bulls can see a path of Box becoming a major player in artificial intelligence. However, for Box to be successful, it also likely means taking on Amazon.com Inc. (AMZN), Alphabet Inc. (GOOGL), and Microsoft Corp. (MSFT), and a bunch of other companies competing in the cloud and data center.
Waiting a Bit Longer
For now, the bulls will have to wait, because, for fiscal 2018, the company is expected to take a loss of $0.17 per share, on revenue of $606.43 million. However, those losses are expected to turn to gains in fiscal 2020, with earnings climbing to $0.06, and then $0.28 per share in 2021.
Revenue growth is not expected to be as robust, forecast to grow by 21.3 percent in 2020 to $735.5 million, and then slowing to only 13.5 percent in 2021 to $834.2 million.
It is a huge bet that Box can become a major player in the race for dominance in AI and the data center.
Unfortunately, we will have to wait a bit longer to find out for sure.