Dropbox's IPO Debuts at $29 a Share

26 March, 2018, 02:32 | Author: Lynette Payne
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Co-founder Arash Ferdowsi's net worth climbed to US$1.1 billion Friday as shares of the file-sharing company jumped as much as 50 per cent on its first day of trading.

The question is whether the hot demand that drove up its IPO price underpins a strong bid for its shares on a day when US equity index futures signal another rough trading session. That appeared to drag down the industry altogether, with Google and Apple having fallen about 7 percent this month.

The stock, listed as "DBX" on the Nasdaq, opened just under $29 and traded as high as $31.60 in the early go.

The cloud-storage company had priced its IPO at $21 a share on Thursday, above its previously expected range.

"Dropbox is going public at the right time".

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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 debut is being closely watched for investor appetite for highly valued young tech companies with more than $1 billion in valuation that have a robust cash flow. Dropbox's IPO was one of the more high anticipated ones in 2018, after the company filed for a confidential IPO back in January.

(NASDAQ: AAPL). It will be hard for Dropbox because many companies already have millions more in paying users including larger funds to enhance its technology. InvestorPlace.com analyst Tom Taulli suggests that "in the case of Dropbox, investors get a chance to get exposure to a next-generation tech company, which is a proven business model". It has an attractive story to justify its need for financing and the market dynamics are good.

Created in 2007, Dropbox is a company that allows users to upload data to the cloud and access it from any internet-connected device.

Venture capital firm Sequoia Capital will retain a stake of about 25 percent. However, 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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