Is Dropbox's Initial IPO Valuation Too High?


The reason is that it will prevent the company from entering key stock market indices such as the S&P 500 that are tracked by major Wall Street investors.

Dropbox executives are getting ready for their roadshow ahead of the company's initial public offering and they're releasing more and more details about the cloud storage company and its financials.

The valuation represents a fall on its last private funding round in 2014 which valued the company at $10bn.

The company could always perform unusually well when trading opens - a 40 percent to 60 percent "pop" on opening day would lift the company back up to its prior valuation - but that's a big gamble.

Dropbox will list on NASDAQ under the stock ticker DBX.

Dropbox Sets IPO Target Valuation at $7 Billion to $8 Billion
Dropbox Just Revealed Its IPO Target—And Its Valuation Has Plunged Since 2014

Dropbox, which was founded in 2007, registered for an IPO last month, calling itself a pioneer in the worldwide adoption of file sync and share software. But the losses are shrinking each year as revenue climbs. "The price had to come down to lure in the investors", said Phil Davis, CEO of, an investment advisory service.

This will be the Class A shares for Dropbox, which will have voting rights of one vote per share.

Dropbox's IPO is expected to be the largest technology offering since Snap went public a year ago. While it claims to have 500 million users in 180 countries, it posted only 11 million paying clients at the end of previous year. With Spotify also headed toward an IPO in the coming weeks, investors will get to render a verdict on whether private investors drove the valuations of these companies too high as the companies' sought to remain private.

A document filed by Dropbox said that Salesforce's ventures arm, Salesforce Ventures, had agreed to buy $100 million worth of Dropbox stock. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock. The cloud storage firm said its free Basic plan is the main vehicle for drawing in new paying customers.

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