Dropbox share value rises 40% on IPO Launch

Dropbox Inc. (NASDAQ: DBX) launched its initial public offering on Friday on the Nasdaq exchange, under the ticker “DBX.” Dropbox’s IPO was one of the more high anticipated ones in 2018, after the company filed for a confidential IPO back in January.

Dropbox was founded back in 2007 by Drew Houston and Arash Ferdowsi. The company offered a service which allowed users to store, share and collaborate on documents, photos and other files via the platform.

Dropbox’s IPO price was set at $21, but the company opened at $29 and continued to rise to over $31 per share, surging nearly 43 percent. Based on the company’s opening price, Dropbox had a market valuation of approximately $12.69 billion.

Earlier in March, Dropbox set a target IPO valuation between $7 billion and $8 billion. Originally, the company expected to raise $756 million, in addition to Salesforce.com Inc.’s $100 million investment through a private placement.

Dropbox attracted many other investors such as Sequoia Capital and Accel Partners. The company has also received funds Fidelity Investments, T. Rowe Price and JPMorgan & Chase Investment, totaling more than $600 million from all the investments.

Dropbox currently has over 500 million registered users across 180 countries, but only 11 million of those users are paying. Although the paying user base is small, Dropbox forecasts that out of the 500 million, 300 million users are more likely to become paying users in the future due to their characteristics such as email domains, devices and geographic attributes.

The company posted revenue of $1.1 billion on a net loss of $111.7 million in 2017.

The cloud storage service has many large competitors such as Alphabet’s (NASDAQ: GOOGL) Google and Apple Inc. (NASDAQ: AAPL). It will be difficult for Dropbox because many companies already have millions more in paying users including larger funds to enhance its technology.

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

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