Should I Invest in Boxabl?
Off the top, we are NOT investment advisors so do your own diligence but this is what I would tell a family member with the information I have as of November 7, 2023.
From what I know right now, I personally would NOT invest in Boxabl (even if I didn’t have a massive conflict of interest with this site), but I do hope they and most others trying to build innovative new and affordable stuff in the housing space have great success.
Here’s Why I Wouldn’t Invest:
The pricing of Boxabl’s current offering is out of this world (and not in a good way)
From what I can tell, they have 20 Billion shares outstanding and the current offering price of shares is effectively $.50 - $.80 / share for most investors in this round including bonuses + warrants. So based on my math, if you invest in this round, you’re giving the current company an implicit $10B+ valuation.
Skyline / Champion, one of the largest modular home companies has a market cap of $3.2B on $2.5B of annual sales (a 1.25X multiple on sales) : SKY (NYSE)
So if you assume a 2X sales multiple, which is much higher than pretty slow growing Skyline / Champion is getting, the company is likely going to have to get to $5B of annual sales just to get to its current valuation in public markets.
If Boxabl ends up selling their units at $100k / unit (the current Boxabl price is in the $60ks), to get to $5B of sales, they would need to sell 50k units per year which would be incredible growth for a company that has delivered 500 units total.
So if you are investing in the company because you want to double your money over the course of the next 5-10 years or whatever optimistic time frame you’re guessing it takes them to get to $10B in sales, you’re guessing they can sell at least 100k, $100k units. Or really move upmarket and can be 4x as large on a revenue basis as the current largest modular company.
Companies that make and ship homes are very difficult to scale
Maintaining a consistent product experience is very difficult given that all lots are different and the on-site installation process is typically executed by 3rd parties.
Margins are typically not great - and you can get squeezed on all sides (i.e. cost of goods can go up, labor can go up, and general buyer demand is connected to lots of things outside of the company’s control - interest rates and the macro economy).
If your main value proposition is price, which is one of Boxabl’s main value propositions, that is a very hard advantage to maintain as a new entrant. Mass market companies like Champion and Clayton already have much more scale and consistently homes at competitive to lower prices on a per sqft basis than what Boxabl is trying to execute.
I don’t really see a sustainable competitive advantage - they have some patents, but I’m not sure I see what they do that couldn’t be emulated by others if there is significant demand for this product type.
Arguments for Investing in Boxabl:
If you did invest in them, I think you’re probably constructing an argument like the following:
There is a massive need and demand for housing and particularly affordable housing in the country - general housing deficit of 6M+ unit.
Boxabl has shown early signs of the ability to develop and ship innovative low-cost housing units and build some level of hype, support, and awareness around a new brand.
Given the above two ideas, it seems very likely that there is a huge company or three that steps in to help address that gap and at least one of those companies will probably be a new company because they are not encumbered by legacy practices, staffing, and technology and Boxabl is the leading contender of new, innovative entrants.
DH Horton, the largest home builder in the U.S., has a market cap of $38B so we have seen home builders get to a scale that would be a reasonable return at Boxabl’s current valuation.
If you think my evaluation here is wrong, please let us know via email and we’ll add in any compelling arguments on either side.
