Boxabl (BXBL) has come into focus after announcing a multiyear agreement that contemplates up to 1,500 factory built homes for LC Vegas Acquisitions, along with updates on its assembly line housing platform and project development expansion.
These announcements come against a mixed trading backdrop for Boxabl. The share price closed at US$4.35 after a 1 day share price decline of 2.03%. The 7 day share price return of 8.48% contrasts with a 90 day share price fall of 58.33% and a 1 year total shareholder return decline of 56.46%. This indicates that recent momentum has picked up slightly, but longer term performance remains weak as the market reassesses both growth potential and execution risk around its factory built housing model.
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Boxabl now has a large headline agreement and a sharp share price pullback on the table. The bigger question is whether this factory built housing story represents a strong business that investors are paying too much for, or too little.
Preferred Multiple of Price to Book Ratio, Is it justified for Boxabl?
Boxabl is currently loss making, has negative equity and carries a P/B ratio of 1.4x compared with around 1.1x for the wider US Consumer Durables sector. That combination makes traditional multiple based valuation harder to rely on because a negative equity base distorts the usual relationship between book value and market value.
In this situation, the SWS DCF model would usually be the cleaner way to think about value because it focuses on projected cash flows rather than accounting equity. However, there is not enough forward looking data on Boxabl to run that model and produce a cash flow based fair value estimate. The result is an early stage stock where pricing signals from both book value and discounted cash flow are limited.
With the company still unprofitable, reporting only $3.2m of revenue against a market cap of about $1.1b, and with no analyst cash flow forecasts available, investors who are interested in Boxabl are effectively taking a view on execution of the factory built housing model rather than comparing a clear fair value number to the current $4.35 share price.
Result: DCF Fair value of $0 (ABOUT RIGHT)
However, Boxabl still faces risks around ongoing losses and negative equity, and any setback in scaling its modular housing projects could quickly weaken investor confidence again.
