Investors want a piece of Dropbox and apparently paid more for it than expected.
Dropbox Inc.co-founder Drew Houston speaks in front of co-founder Arash Ferdowsi celebrate as Dropbox (DBX) is listed for the company's initial public offering (IPO) at the Nasdaq Market Site in NY, U.S., March 23, 2018. That's more than expected, especially given the original range of $16 to $18 a share last week, which was raised a couple of dollars this week. That's higher than the $10 billion valuation that Dropbox fetched in a 2014 private funding round, and allays any concerns related to the negative optics of Dropbox going public at a lower valuation (a downround IPO).
But the stock, which is trading under the ticker symbol DBX, opened at $29 and then continued to climb, rising to around $31 a share 15 minutes into its trading session. That's somewhat unique in the cloud storage industry, where enterprise sales often drive income.
The company reported revenue of $1.11 billion in 2017, up from $844.8 million a year earlier. Based on the company's opening price, Dropbox had a market valuation of approximately $12.69 billion.
The other cloud storing companies that Dropbox competes are Alphabet Inc's (GOOGL.O) Google, Microsoft Corp (MSFT.O), Amazon.com Inc (AMZN.O), Atlassian Corporation (TEAM) and the strongest of all, Box Inc (BOX.N).
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The company made its public market debut at a time when technology stocks have slipped out of favor. We generated net losses of $325.9 million, $210.2 million, and $111.7 million in 2015, 2016, and 2017, respectively.
"It is a very impressive set of operating metrics", said Neeraj Agrawal, general partner at tech-focused investment firm Battery Ventures, which has also invested in household-goods retailer Wayfair Inc. and software maker Marketo Inc.
"We've always lived in a competitive environment. and importantly all our growth has happened in that environment", Houston said.
Like Snap, Dropbox warned potential investors that it may never be profitable.