On Friday, March 23rd, 2018, file sharing and storage giant Dropbox went public, holding an Initial Public Offering (IPO) on the Nasdaq stock exchange (Nasdaq: DBX). The Dropbox IPO, which is the biggest for a tech company since that of Snap Inc. last year, was a tremendous success over its first two days of trading, as the DBX stock soared. Shortly after, the stock was made available for trading on the eToro platform.
Your capital is at risk. This is not investment advice.
As with all IPOs, the Dropbox stock was initially offered to early investors at a set price. The initial price for each Dropbox share was set at $21, however, by the time it hit the open market, prices were significantly higher with DBX showing gains of more than 40% when the market closed on that Friday. The enthusiasm hadn’t waned by the following Monday, as the DBX stock rose an additional 7%, reaching an overall market cap of more than $13 billion.
The Dropbox IPO: What affected the launch?
While planned for quite some time, the Dropbox IPO took place at a time of instability on Wall Street. Prior to the IPO, President Trump and the Chinese government were in the midst of exchanging blows, as Trump planned to slap heavy tariffs on Chinese imports and China retaliated with tariffs of its own. The fear of an impending trade war sent Wall Street spiralling down, with major indices and stocks tumbling.
At the same time, investors were processing the implications of an alleged data breach at Facebook that may have affected the outcome of the US 2016 elections. The ordeal of which was playing out rather harshly on tech stocks that week.
However, despite these adverse circumstances, Dropbox attracted many investors, and the DBX IPO was welcomed with open arms by the Wall Street and the eToro community.
Dropbox is a cloud computing force
With more than a decade of experience, Dropbox is one of the most dominant players in the cloud industry today. Founded in 2007 by two MIT students, Drew Houston and Arash Ferdowsi, Dropbox set out to create a cloud-based file storage solution that would feature an easy-to-use interface. This ease-of-use has been one of the company’s core values since then, and, alongside its free 2GB subscription plan, is one of its main reasons it has become so popular.
Over the years, Dropbox amassed an impressive number of users, totalling more than 500 million today. Despite not disclosing how many of its users are paid subscribers when filing for the IPO, Dropbox did reveal that the average user brings in more than $100 per year. Following the company’s early success several tech giants, such as Google, Apple and Amazon, have launched similar file sharing and storage products. However, the Dropbox’s strong user base and its focus on improving its intuitive interface, has kept it a major player in the file sharing and storage industry.
While recently reporting net losses, mainly due to expenses having to do with depreciation and stock compensation, the company was cash flow positive before going public. Operating as a startup company, Dropbox reached a peak valuation of some $10 billion in 2014 – higher than its estimated value of some $9 billion when it went public. However, the success of its IPO drove its market cap higher, making it more valuable now than it has ever been.
Dropbox on eToro
Following the successful IPO, the DBX stock became available for trading and investing on the eToro platform at the first available market rate, catching the second wave of the stock’s price jump, rising more than 7% during its first day of trading on the platform. eToro clients can add Dropbox to their portfolios, either as part of a short or long-term strategy. The DBX stock is another fine addition to eToro’s ever-growing selection of financial instruments.
Your capital is at risk. This is not investment advice.