Shares in Dropbox soar into the clouds

Laverne Mann
March 25, 2018

The initial public offering of Dropbox Inc. may help end the lack of Silicon Valley companies from going public thanks to their own high private valuations. "The decision by Salesforce.com (CRM) to invest $100 million in the IPO is another promising sign, and may provide investors a backstop in case fundamentals of the business weaken". The stock was up more than 40% at $29.60 on Friday, valuing the company at more than $12 billion. That would be in addition to the 26.8 million shares that Dropbox has already sold through the IPO (the other 9.2 million shares sold through the offering were sold by existing shareholders).

Dropbox, which faces strong competition from tech giants Apple and Google, posted slightly more than $1.1 billion in revenue and a net loss of almost $112 million past year.

"There's certainly more revenue-stage companies that are still private that are looking at when to go public", said Matt Murphy, a partner with the venture capital firm Menlo Ventures.

Because the deal had generated interest so far in excess of the 36 million shares being offered, Dropbox executives weren't too concerned about those market dynamics.

The 11-year-old company reported revenue of $1.11 billion in 2017, up from $844.8 million a year earlier.

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Investors want a piece of Dropbox and apparently paid more for it than expected.

The company, founded 11 years ago, boasts about 500 million users.

"Dropbox Business is a good fit for organizations aiming to enable modern file productivity and collaboration with external parties, prioritizing on user experience and flexibility", Gartner said in its report.

One of the major players active in this field is Dropbox, which listed on the Nasdaq stock exchange on Friday in the largest tech stock IPO in more than a year. According to Forbes, Graham advised Houston to get a co-founder onboard before submitting his application. LLC and J.P. Morgan Securities LLC are joint lead bookrunning managers. On Thursday, stock market indexes plunged more than 2 percent as investors fretted about the prospect of a trade war between the United States and China. "If they show that they can integrate themselves with large businesses who will continue using the product, we think that could create some switching costs down the line and really help them financially".

Other reports by MaliBehiribAe

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