BOXL stock keeps impressing us here at Insider Financial with the moves CEO Michael Pope is making. Unfortunately, the share price and Mr. Market has failed to realize this. The good news, however, is that this dislocation has created an enormous opportunity for investors willing to take the long view.
In this article, we lay out the bull case for BOXL stock and why it’s a smart bet at current levels. As you can see from the chart below, BOXL stock trades at a fraction of its $8 IPO price and below the all-time high just above $16.
First up, here’s a little background info for those not familiar with BOXL stock. Boxlight Corporation is a leading provider of technology solutions for the global learning market. The company aims to improve learning and engagement in classrooms and to help educators enhance student outcomes by developing the products they need. The Company develops, sells, and services its integrated, interactive solution suite including software, classroom technologies, professional development, and support services.
CEO Michael Pope has been making a series of big moves. His biggest move by far is the acquisition of Sahara Presentation Systems PLC, a leader in distributed and manufactured AV solutions.
Headquartered in the United Kingdom, Sahara is a leader in distributed AV products and a manufacturer of multi-award winning touchscreens and digital signage products, including the globally renowned Clevertouch and Sedao brands. The company was formed in 1976 by Kevin and Nigel Batley, who grew the company to more than 100 employees with offices worldwide. Michael Pope, Chairman, and CEO at Boxlight said:
“The combined companies are generating greater than USD 100 million in sales and are highly profitable. I look forward to reporting our consolidated financial statements in future quarters.”
The total purchase price was GBP 74,000,000 (approximately USD 94,900,000) in the form of GBP 52,000,000 (approximately USD 66,700,000) cash and GBP 22,000,000 (approximately USD 28,200,000) preferred stock. The preferred shares don’t contain a toxic component and near-term conversion will only be possible after a substantial increase in the company’s share price. In addition, there’s a lock-up agreement.
$22 Million Funding
With the Sahara deal, we now know why CEO Michael Pope raised $22 million. He had his eyes on Sahara and needed the funding to do so. On September, 22nd, BOXL stock closed $22,000,000 in funding from Lind Global Macro Fund, LP, an investment fund managed by The Lind Partners, a New York-based institutional fund manager.
The investment was in the form of a $22,000,000 convertible note with a 24-month maturity, a 4% APR (0% APR if the Company’s stock price is trading above $3.50), and a fixed conversion price of $3.50 per share of Boxlight’s Class A voting common stock. Michael Pope, Chairman and Chief Executive Officer at Boxlight said:
“Proceeds from the investment, along with the $34.5 million in gross proceeds from our July 2020 offering, will be used for future acquisition opportunities. Specifically, we are targeting companies for acquisition that will either increase our global footprint or enhance our solutions portfolio for the education market. Potential candidates will be immediately accretive, generate significant revenues, produce positive earnings, and exhibit substantial growth potential.”
Principal payments are due in 20 monthly installments beginning November 2020. Under the terms of the note, Boxlight has the right to make principal and interest payments in the form of either cash or Class A common stock. Boxlight also has the right to prepay the convertible note at any time without penalty. Should Boxlight choose to exercise its Buy-Back Right, Lind Global Macro Fund will have the option of converting 25 percent of the outstanding face value into shares of Boxlight Class A common stock.
WHY BOXL STOCK IS A SMART BET
Here are a few reasons why we like BOXL stock.
- Boxlight has a partnership with Samsung that is a game-changer.
- Federal and state funding is coming for schools to set up online education. Boxlight provides seamless solutions for this scenario, which is further enhanced by a partnership with Samsung.
- Under $2, Boxlight stock trades at a fraction of its $8 IPO price and below the all-time high just above $16.
- Its current market cap is around $82 million, yet will have yearly revenues of around $130 million with the Sahara deal.
- Zoom Rooms Bundles, which provides customers an all-inclusive hardware solution to launch Zoom’s popular video communication conference room system.
- Watch the video interview with CEO Michael Pope.
Online education stocks are about to go parabolic. Students need to be prepared to use technology to better prepare them for today’s new work from home environment. Workers have had to adapt to Zoom, Slack, and other technologies. Teachers and students will do the same. The best bet is to find the company with the best technology and management in the space. In our opinion, that is BOXL stock, especially with CEO Michael Pope at the helm and the game-changing acquisition of Sahara. Any dips in BOXL stock represent a discount entry opportunity.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in NASDAQ:BOXL, or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.