Here comes the Dropbox IPO

Here comes the Dropbox IPO

The excitement around Dropbox's IPO signals a market appetite for more big tech companies to go public. Dropbox, which raised $756 million in the largest tech IPO since Snap a year ago, will trade on the NASDAQ under the ticker "DBX".

After Snap's disappointing IPO - it is now trading roughly 4% below its $17 IPO price - analysts believe the Dropbox and Spotify offerings boost the tech IPO market this year.

The solid first-day pop came despite weakness in the wider US stock market. On Thursday, benchmark indexes plummeted more than 2 percent on worries about a potential trade war between the US and China.

The S&P tech index was down 2.73 percent.

Dropbox shares soared as much as 48 percent to $31 at 11:37 a.m.in NY, giving the company a market value of $11.9 billion.

The company says more than 90% of Dropbox's revenue comes from individual users purchasing subscriptions.




Like Snap, Dropbox warned potential investors that it may never be profitable.

Dropbox Inc.'s warm welcome from the market has minted the startup's second billionaire.

A strong debut would bode well for music streaming service Spotify - valued at roughly $19 billion in the private markets - that has also filed for a direct listing and will start trading on the New York Stock Exchange on April 3.

"Dropbox is going public at the right time". That represents just over 40 percent growth from the initial price, and gives the company a valuation of over $12.5 billion. "It has an attractive story to justify its need for financing and the market dynamics are good", said Josh Lerner, professor of Investment Banking at Harvard Business School.

The company will also use this time in the limelight to inform users of its different functions. As a public company Dropbox will be under pressure to quickly trim its losses.

Dropbox posted a revenue of $1.11bn in 2017, up 31% year-on-year, as it almost halved its full-year net losses from the $210.2m it returned in 2016.

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