Box, Inc. (BOX) has Makings of Next Zynga (ZNGA), Groupon (GRPN): Lots of Noise, Weakening Fundamentals - Global Equities

Global Equities' Trip Chowdhry is commenting on Box, Inc. (NYSE: BOX) following the company's successful IPO earlier this morning.

Chowdhry thinks fundamental investors should avoid Box, likening it to the next Zynga (Nasdaq: ZNGA), Groupon (Nasdaq: GRPN), and GoPro (Nasdaq: GPRO). There's a lot of noise, but fundamentals are weakening.

Chowdhry noted the following points:

-- Storage is hyper competitive, price declines are much steeper than the volume growth
-- To our best knowledge, BOX does not use Amazon.com AWS, it uses its own servers at co-location centers like Rackspace...so BOX cost structure will always be to their competitive disadvantage
-- BOX lacks an Anchor:

• Investors should not get carried away by looking at the BOX metrics ... of the Paying organizations, Registered users, Content interactions etc ...these metrics are meaningless
• The real metric that matters...BOX just does not talk about...."How much total storage have all the customers put in BOX,....and how much of that is 'HOT', how much of that is 'WARM' and how much is 'COLD" and how has it changed over time
• How many customers are using BOX API's and building custom Apps on top of BOX...and how are the trends.......BTW, BOX charging for API's is a strategic mistake

-- BOX just does not have a winning recipe:

• The only way BOX will survive as a company is if for every $1 the customer spends on BOX, that customer is also spending at least $4 in creating a custom APP on BOX
• Our research is not indicating the above bullet

You May Also Be Interested In

• Viking Holdings (VIK) Announces 44M Share IPO at $21-$25/sh
• Centuri (CTRI) Opens At $23.75, IPO At $21 (earlier)
• Chinese bubble tea company Chabaidao sees shares tumble in Hong Kong market debut