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Thinking About Investing in Boxabl, the Company Looking Streamline Modular Housing, and ADUs?

Updated: Oct 25, 2022

On track to be the biggest raise in StartEngine history… but is it justified?

Many people have been kicking themselves after missing the last Boxabl raise ended, only for the company to become a national sensation nearly overnight. The company was definitely doing incredibly well, but a few tweet exchanges by Elon Musk, followed by their months-long advertising campaigns, a 10-for-1 split, and a host of other favorable news has led to a skyrocketing in valuation. The hype has continued with over $4m raised on StartEngine in their first day, and the momentum still going strong.

As many look into this raise, many people are asking themselves if the $3Bn valuation is worth it, where are they at, and is this a place they should stick their money.

Industry — 10/10

Overall, the housing and ADU market has been exploding recently, and it simply isn’t going anywhere, ever. Further, with stable and competitive prices, I think Boxabls will be a very tempting alternative to a traditional house. While the price of land and houses will be rising and falling with time, the price of Boxabl’s will remain mostly stable. Sure, the empty land is still a factor, but starting out with a $50,000 Boxabl on it just to start up, then once you pay it off, work on adding to your house or buying a second one will be a great alternative for many

first time home buyers.

Overall, the housing and ADU market will stay and continue strong. Even if the traditional housing market dips or continues, that likely won't have much effect on Boxabl because their prices will remain stable as there will be pent-up demand for houses for the foreseeable future. Not to mention, the housing market is pretty much the largest market in the world so it doesn’t get much better than that.

Market Differentiation — 23/25

As I have been slowly improving and adding things to my company profile articles, I decided to break it down into sub-topics in order for readers to see how each rating actually comes out. This segment is broken up into their Business Model and Product & Their IP and Branding. These are two very important factors, and hence why 20% of the total 100 points are in this section. (For reference the 20/20 is what you get from adding up the subsections points)

Business Model & Product (12/13)

Here, they have a phenomenal business model and product. Their business model is simple but incredibly effective, will produce massive amounts of revenue, and has tons of room for expansion. While the current base model Boxabls cost $50,000 they can easily add various features to each Boxabl in order to turn that into a slightly larger check. As well, the ability to expand and produce modular housing means people might order several at a time, or come back to order several more over the years to add to their first Boxabl.

There is also the potential for smaller units at less than $50,000 with things like Home Offices, Garages, Storage spaces, and tons more. All of this will have continually improving margins and a massive competitive edge if they are able to fully, or mostly, automate the process to reduce labor costs.

Modular housing has been tried with varying success in a number of instances throughout history, but Boxabl definitely seems to be the current front runner in the space. They are doing a great job currently, and there is tons of room for expansion.

Intellectual Property & Branding (11/12)

With dozens of patents granted or pending, Boxabls IP portfolio is incredibly strong. Intellectual property is incredibly crucial, and if home automation begins to become a mainstream process, not only will Boxabls patents potentially bar competitors, they could easily generate hundreds of millions in revenue from various licensing deals. Their patent portfolio itself could either give them a 2-decade headstart or generate millions in revenue. Should this become an industry norm, their patent portfolio alone could become worth billions at this rate.

As well, their branding has been great, it’s a really clean, catchy name. It gets the point across, and they there all-around great on that front.

Financials & Valuation — 22/30

If there is one area that the company is lacking most, it would definitely be this. The valuation is a bit high, the revenue is currently a bit low, all we can base the investment on is guesstimates.

Valuation — 4/10

Admittedly, this is one of the weaker points. While their financials show no revenue, have actually already started shipping Boxabls and producing them at a rate of 2 per day. They have already completed over 100 this year, and they have plans to ramp up to 4/day sometime this year as well. This means that they are likely sitting between $35–60m in revenue this year assuming 365 days working, depending on when they convert over. This also assumes $50,000 revenue per Boxabl, which could increase if they further monetize it.

This means their valuation is 50–80x this year's revenue. Generally, anything above 10x forward revenue is pretty expensive for most industries. That being said, this could be worse, and given the fact that this will be going for months most likely, and it's unlikely you will have the chance to invest at this valuation, it could definitely still be worth it.

As far mitigating factors go, a strong IP portfolio, high growth, lots of demand, and tons of pre-orders do help improve the situation.

Momentum — 10/10

Their momentum has been undeniably strong. Their first day was the largest 1-day amount raised ever on StartEngine, they’ve received tweets from Elon, and they have enough reservations to last them for the next decade if they were to 10x current output. With 80,000 pre-orders, they could produce 20 Boxabls a day ($365m yearly revenue) and it would still take them a decade to fulfill just the current orders alone. Not to mention, they will obviously get more orders over that period so production is the only issue.

They are likely to be able to continue production for the next decade without any advertising which is always a plus. The main thing here will just be ramping up production.

Revenue & Financials — 8/10

They have been basically fundraising for the past year straight, and they are now taking in $100,000/day in revenue (Well, some might be deferred or paid overtime but still) so their cash flow is most likely strong. However, given the fact they are ramping up FAST and building a massive factory (Their use of funds is to build a Billion dollar+ factory), they are most likely burning through cash, which could become an issue. They basically built an entire factory from nothing to 2 Boxabls/day in a few months so this high-growth strategy is great for investors, but missteps can prove detrimental. They are currently raising $1bn+ for a mega factory, which will be amazing if they built it and succeed, but if they have to take on lots of debt, or things don't go as planned, again, that could turn out poorly.

Further, the revenue is strong and growing fast, but relative to their valuation, it is lacking at this point. While high-growth companies, and those in the equity crowdfunding world, do get a premium it's still a bit pricey. They do have a pretty straight shot to ramping up revenue, and tons of opportunities to improve revenue from IP licensing to upcharges on Casitas, so it still gets a strong score.

Founders & Team — 20/25

As always, this is a big one and the co-founders do relatively well. A good team is important because, in theory, if they have had an exit before, they can do it again and know what it takes. They won’t make the same mistakes, have knowledge and connections, and won’t be as nervous to make decisions.

Here, they only list a few people's bios, but the Co-Founders are both long-time entrepreneurs. Paolo has 150+ patents and has successfully licensed them, and Boxabls patent portfolio is already incredibly strong so that adds a lot to the table. Knowing how to successfully license and manage a patent portfolio can be a huge asset and tons of bonus revenue.

While Galiano doesn’t name any specific exits named, he does have some previous ventures listed and is an entrepreneur.

Lastly, they have built the business, presumably, to a $3bn valuation and tens most likely tens of millions in revenue this year, so that within itself does give them considerable points.

Exit Potential & ‘X-Factor’ — 10/10

Generally, most companies look to IPO once they cross that $100m/yearly revenue threshold. Boxabl will most likely cross that in 2023 and has a pretty straight ramp-up to potential billions in revenue as they continually produce more houses. The IPO potential here is about as strong as you will get in a company, but it's just a matter of time.

The “X-Factor” is a kind of new thing I am adding but mainly just for those extra cool things about a company. Here, Elon Musk owns one and it sits on his Starbase, and has tweeted about Boxabl a couple of times which is big. Further, they have an unprecedented amount of interest in nearly one of the best times for their market that could possibly exist. North America and Europe are on the brink of a housing crisis and traditional material costs are in short supply, and prices are skyrocketing. The time for an alternative has never been better, ever.

Put all this together, along with the already unprecedented demand for their product, and I think this could easily become a $100Bn company within the next decade.

Conclusion — 85/100

Ultimately, the company is incredibly strong here and the main issue here is with the valuation. While it is a bit hefty, most other aspects of the business are incredibly strong. The main decision here is whether you believe they will be able to properly execute their ramp up with their mega-factory and if the current valuation is worth it in the future. They might not have another Equity Crowdfunding raise after this, and so this might be the last chance retail gets before an IPO. However, if they do have another, do you believe it will be at a lower or equal valuation?

Ultimately, an 85 is still an incredibly strong score, but this is now bordering on “established business” instead of a startup.

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