Dropbox IPO priced higher than expected on strong demand

Dropbox IPO priced higher than expected on strong demand

Dropbox, Inc. (NASDAQ: DBX) stock traded on a public market for the first time Friday and was more than 35 percent higher than its offering price at the close.

The company raised $756 million in its initial public offering, Bloomberg reported, citing someone familiar with the information.

According to The Wall Street Journal, the initial share price for the firm will be set at $21, above the previously forecast range, but even with strong investor demand, the company's valuation will come in below $10bn, which it was valued at during its last private funding round.

The San Francisco-based provider of data management services initially planned to price shares in a range of 16 to 18, but raised that to a range of 18 to 20 on strong interest from institutional investors.

Dropbox is now the largest tech IPO since Snap previous year and provides a more favorable launch environment for the upcoming Spotify debut.

More news: Did Donald Trump's predecessors congratulate Vladimir Putin's election win?

Dropbox provides free cloud storage, file synchronization and personal cloud feature along with client software. In all, the pricing put the market cap of Dropbox near $9.2 billion.

Dropbox's debut is the biggest tech IPO since Snap Inc., the owner of multimedia messaging app Snapchat, went public on March 2, 2017. Its losses have narrowed to $112 million past year from $326 million in 2015, and the company says it is moving toward becoming profitable. Dropbox faces some tough competition in titans like Amazon, Apple, Google and Microsoft.

Dropbox attracted many other investors such as Sequoia Capital and Accel Partners. While Blue Apron was founded in 2012 and went public within five years, Dropbox co-founders Houston and Ferdowsi have had more than a decade to prepare for this moment. "But at the same time, the environment is also competitive", he suggested. 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. Today, it offers a platform for businesses that enables collaborative editing of documents and other files.

But, after being burned by a disappointing Snap (SNAP) IPO, will they pour money into the Dropbox and Spotify IPOs?

Goldman Sachs, J.P. Morgan, Deutsche Bank and Allen & Co. were among the top underwriters for the company's IPO.

Related Articles