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Dropbox Enters the Market With a Bang

25 March, 2018, 00:37 | Author: Lydia Fleming
  • Above Dropbox app Image Credit Paul Sawers  VentureBeat

Having topped expectations with the upsized price of its initial public offering, Dropbox Inc on Friday faces its next big challenge: a successful launch of trading when global stock markets are on the defensive and tech shares are particularly soft. On Thursday, March 22 the company set an IPO price of $21 per share, $1 above the highest expected amount of $20 and it was several times oversubscribed.

The IPO price of $21 per share is already way above the $16 to $18 price range previously proposed by the company earlier this month.

Dropbox (DBX) shares jumped on its first day of trading Friday, as the initial public offering saw shares soar by almost 50% in its first few minutes of stock action. Smaller rival Box.com is the closest comparable pure-play in cloud storage, and trades at 6.1 times sales in comparison. Previous year it reported a net loss of $111.7 million on $1.11 billion of revenue. However, the company went on to double revenues, shrink costs and become cash-flow positive, with its stock increasing more than sixfold as a result.

Including the restricted stock units, the value of the company now increases to over $9.1 billion. Drew Houston, the company's chief executive officer and co-founder, said in an interview Friday that investors seemed to understand what he described as an unusual business model that has the "virality" of a consumer company combined with the "predictability and monetization of a [software-as-a-service] company". The pressure is now on Dropbox to execute as a public company.

"Dropbox is going public at the right time". Today, it offers a platform for businesses that enables collaborative editing of documents and other files.


Dropbox, based in San Francisco and founded 11 years ago, began as a free service to store large files like photos and music. The company has also received funds Fidelity Investments, T. Rowe Price and JPMorgan & Chase Investment, totaling more than $600 million from all the investments.

The company posted a net loss of $111.7 million in 2017, a narrower loss than 2016's of $210.2 million.

But, after being burned by a disappointing Snap (SNAP) IPO, will they pour money into the Dropbox and Spotify IPOs?

The main underwriters for the offering are Goldman Sachs Group Inc. and JPMorgan Chase & Co., though the filing lists many other participating banks: Deutsche Bank Securities, Allen & Co.

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