NEW YORK (TheStreet) -- The Box (BOX) - Get Box, Inc. Class A Reportinitial public offering is upon us, and shares are scheduled to begin trading Friday. The company plans to sell 12.5 million shares, roughly 10% of the company, at somewhere between $11 and $13 per share.
The implied valuation is around $1.4 billion for the company, significantly lower than the $2.4 billion valuation suggested this summer in a round of private funding.
While the stock is likely to perform well in its first few days of trading, TheStreet TV's Jack Mohr is skeptical of the company's long-term opportunities.
Shares are likely to do well right off the bat, due to simple supply and demand. With just 12.5 million shares coming to market, investors will be willing to pay more for the stock, in order to ensure that they get a piece of the pie.
However, the longer-term outlook is more questionable, since Box operates in the cloud storage business.
While the cloud is growing quickly, the industry is also becoming commoditized, as tech titans like Google (GOOGL) - Get Alphabet Inc. Class A Report , Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report and Amazon (AMZN) - Get Amazon.com, Inc. Report all drive storage prices lower.
The commoditization of the industry will make it hard for smaller companies like Box to compete.
Google, Microsoft and other companies can afford to lower storage prices, because it "tethers" users to their hardware and software ecosystems. Then those users pay for other services, Mohr said.
While he acknowledged that Box does have some noteworthy customers -- nearly half of Fortune 500 companies -- Box's long-term prospects are still dicey.
Mohr says he's willing to pay up to 6 times sales for Box, or up to $17.50 per share. Beyond that, investors are just chasing the hype, he concluded.
-- Written by Bret Kenwell
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.