Company Description

Dropbox is an American company situated in San Francisco, California. The company offers file hosting services through different avenues including; personal cloud, file synchronization, cloud storage and client software (Dropbox Inc).Developed by MIT students ArashFerdowsi and Drew Houston back in 2007, the company has quickly grown to be a leader in the cloud services business.According to TechCrunch reports, the company was raising close to US$300 million in July 2011. The magazine also placed Dropbox in the $10 billion valuation range.

IPO Price Range

Dropbox filed its first initial public offering(IPO) on Nasdaq on February 2018. The company and its investment bankers initially estimated to sell the IPO at close to $700 million. The figure however changed later as Dropbox shares went up by close to 36 percent by the closeof the market during its initial day of going public (Oyedele). The company’s market valuation stood at around $ 10 billion.

IPO

Dropbox priced its IPO above prospects at $21 per share. The company anticipated raising over $750 million in the sale. The company sold 36million shares, and according to a CNBC source, the offering was 25 times oversubscribed.Dropbox collected $756 million making the company the largest tech IPO since snap in 2017 (Dropbox prices IPO at $21 per share).

Indications show that early investors sold stock since investors were quick in buying Dropbox’s stock on its first Day of sale. This led to the company’s shares closing at $28.48 on its first sale of stock, an up excess of close to 35 percent.

First-day stock performance

Dropbox’s performed well on its first day of trading. In fact, it had been a whole year since another tech company(snap) had recorded such outstanding figures in its first day of selling its IPO. The company’s stock opened at $29 on the NASDAQ and went up by close to 50 percent to a high of $31.60 in early trading (Bary). Dropbox had a market valuation of $ 10-billion in its final private funding, but after the company’s stock’s opening price, it gained a $12 billion market valuation.  Dropbox’s performed well when comparing its stock value to S&P 500 prices on that day. According to yahoo finance, the closing value of the S&P 500 on Dropbox’s IPO date was 2588.26

Stock performance since the first day

Dropbox’s closing price on its first day of trading was $28.48 per share; this recorded an upward trajectory for the next five days with the stock price closing at $ 31.25 by March 28, 2018. In the final quarter of 2018 however, Dropbox saw a drop in its stock price to open at$26.90 on September 28 and a further decline to close at $20.43 on December 30.Today, Dropbox’s price per share closed at $25.49.The S&P 500 performance over the same period indicates an improvement since it closed at 2588.26 on Dropbox’s IPO first day and currently stands at 2784.70 (Yahoo Finance).

Value

The total value of Dropbox Company implied by the IPOwas approximately $12 billion. The huge amount is attributed to the increase in Dropbox’s share per price on its opening day from the anticipated $21 to $28. Currently, the company is valued at $10.362 billion according to Yahoo’s finance market cap valuation (Yahoo Finance).

Outlook

As an investor, I would consider the IPO a success since the proceeds earned from the sale exceeded the targets expected.

Works Cited

Bary, Emily. Dropbox IPO: 5 things to know about the cloud-storage company. 23 March 2018. https://www.marketwatch.com/story/dropbox-ipo-five-things-to-know-about-the-cloud-storage-company-2018-02-26. 21 February 2019.

Dropbox Inc. Dropbox. 2019. https://www.dropbox.com/. 21 February 2019.

“Dropbox prices IPO at $21 per share.” 22 March 2018. CNBC. https://www.cnbc.com/2018/03/22/dropbox-will-price-ipo-at-21-per-share-source-says.html. 21 February 2019.

Oyedele, Akin. “Dropbox surges 36% in trading debut.” 23 March 2018. Business Insider. https://www.businessinsider.com/dropbox-ipo-stock-price-2018-3?IR=T. 21 february 2019.

Yahoo Finance. DropBox, Inc (DBX) Historical Data. 21 February 2019. https://finance.yahoo.com/quote/DBX/history?p=DBX. 21 February 2019.

—. S&P 500 (^GSPC). 21 February 2019. https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC. 21 February 2019.

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