Wednesday, 17 October, 2018

Dropbox IPO priced higher than expected on strong demand

Dropbox Inc Dropbox Inc
Oscar Goodwin | 26 March, 2018, 02:37

Dropbox surged by as much as 44% in its trading debut on Friday, marking a strong start to the most prominent tech initial public offering so far this year.

"The strong performance of the Dropbox IPO may open the door for more technology unicorns to IPO throughout the rest of 2018", Sohail Prasad, co-founder and co-CEO of Equidate, a platform for trading of shares in private technology firms, told Reuters.

After Snap's disappointing IPO - it is now trading roughly 4% below its $17 IPO price - analysts believe the Dropbox and Spotify offerings boost the tech IPO market this year.

Its first day success came even amid a broader market sell-off, one that's hit the tech sector especially hard. The S&P 500 dropped by 1.8% over the same period, while Nasdaq fell by 2.4%.

The stock opened at $29 per share and rose above $30 shortly after, giving the company an $11.9 billion valuation.

The company says more than 90% of Dropbox's revenue comes from individual users purchasing subscriptions.

"In the case of Dropbox, investors get a chance to get exposure to a next-generation tech company, which is a proven business model", said Tom Taulli, InvestorPlace.com analyst.

The pop in Dropbox's price may bode well for Spotify, valued at roughly $19 billion in the private market. That job developing your brand name and also constructing up worth, it's lastly time for the market to choose just what your firm is really worth.

Dropbox competes with Box as its main cloud storage rival, as well as consumer cloud offerings from Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN) and Google (NASDAQ: GOOGL).

At its highest trading price, the cloud-storage company was worth almost $12 billion, above its most recent private valuation. Now that it is a public company, it is expected that Dropbox will be pressured to start turning a profit. Full-year net loss almost halved from the $210.2 million in 2016.

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