Box shocks investors, posts massive 66% gain in stock market debut

Box Inc. big day could encourage other cloud-computing companies to think about launching their own IPO to cash in.

Box Inc. enjoyed a massive market debut on Friday with shares of the company surging 66 percent, despite criticisms that the software company was focused more on marketing and less on making itself profitable.

The stock ended the day at $23.23, which would put market capitalization at around $2.7 billion, about 12 percent higher than what investors purchased it at back in July, and its IPO (initial public offering) price was $14 per share on Thursday, according to a Wall Street Journal report.

Box executives were on the floor of the New York Stock Exchange to celebrate the news. The results also pleased competitors, with Vineet Jain, chief executive of online storage provider Egnyte saying that he had received excited calls from board members, according to the report. He said it is evidence that this is a category of strong growth, and now there is a “big spotlight” on it.

Jain said he wants to take his own company, based in Mountain View, Calif., public sometimes in 2016 as long as he meets his goals from becoming profitable in about a year. There are other cloud-computing startups that are expected to hold IPOs possibly this year, including Cloudera Inc. Hootsuite Media Inc., and Docusign Inc.

The announcement is likely to encourage other startups to start thinking about its own IPO.

Cloud-computing stocks had actually been on a decline, and a sudden market corretion hammered makers of business software back int he spring, causing the average value of 37 publicly trading companies in the cloud computing industry to drop 40 percent.

Box had just filed for its IPO when the correction occurred, causing them to postpone it, and the company spent the next few months seeking private investors. It received such funding from private-equity firm TPG and hedge fund Coatue on the condition that they would acquire more shares of the company if the IPO was sold at below the $20 per share they paid.

Box has since slashed its sales and marketing budget in a bid to boost revenue and increase the company’s potential profitability.