Dropbox sets IPO Target Valuation up to $8 Billion

Dropbox Inc. updated its S-1 filing on Monday, setting its initial public offering target valuation of approximately $7 billion to $8 billion, below the previous $10 billion valuation back in 2014. The online storage service company said it expects shares to be priced at $16 to $18. The company will be listed on the Nasdaq exchange under the ticker “DBX”, according to filing.

At midpoint of the range, Dropbox’s IPO would be approximately $612 million, the largest tech IPO since Snap Inc. (NYSE: SNAP).

Dropbox also announced in its filings that investment firm, Salesforce.com will buy $100 million worth of shares offered when the IPO closes. Dropbox intends to make 36 million shares public.

The company also announced a reverse stock split of 1.5:1 for its current private investors. This will allow Dropbox to set a higher IPO price per share without causing disruption among its current investors.

Dropbox has over 500 million registered users across more than 180 countries globally, but only 11 million of those users are paying. The company posted revenue of $1.1 billion on a net loss of $111.7 million.

Although, only 11 million users are paying, Dropbox forecasts that out of its 500 million users, approximately 300 million of them are more likely to become paying users in the future due to their characteristics such as email domains, devices and geographic attributes.

The company did not specify an exact date to launch its IPO, but once Dropbox does go to public, it will enter a highly competitive market. The company will face major competitors such as Alphabet’s (NASDAQ: GOOGL) Google and Apple Inc. (NASDAQ: AAPL), who have also been integrating technology into cloud services.

But in Dropbox’s filings, it says that its application works seamlessly with other products such as Google, Microsoft, Slack and Autodesk, as more than 75 percent of Dropbox’s business teams have linked their accounts to multiple third-party applications.

The cloud storage provider has also drawn interest from other venture firms such as Sequoia Capital and Accel Partners. The company has also received funds from Fidelity Investments, T. Rowe Price and JPMorgan & Chase Investment, totaling nearly $600 million of funding, according to Crunchbase.

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