Dropbox tops private valuation as shares soar in market debut

  • Dropbox tops private valuation as shares soar in market debut

Dropbox tops private valuation as shares soar in market debut

Dropbox Inc. exceeded its most recent private valuation in its market debut, as shares jumped after pricing above their marketed range in the biggest technology initial public offering of the year.

Dropbox's IPO is being closely watched by the investment world to gauge market appetite for tech unicorns - young companies valued at more than $1 billion.

The IPO raised $756 million for Dropbox, in addition to $100 million that Salesforce.com Inc. invested in the company through a private placement ahead of the listing.

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. Initially, shares were expected to sell in the $16 to $18 range.

The IPO, which values Dropbox at $9.2 billion, is among the most highly anticipated in the tech industry since Snapchat's past year.

Shares have started trading today and have surged as much as 50% higher than that offering price as of this writing.

In a nutshell, Dropbox lets you create a folder on your computer where you can store your files, which are then hosted in the cloud.

Dropbox reported revenue of US$1.11 billion in 2017, up 32 per cent from a year earlier.

The tech company declared itself cash-flow positive in 2016.

The shares quickly climbed to $31, a rise of 47.6 per cent and well above the $21 offer price, valuing the company at about $12 billion.

The cloud storage service has many large competitors such as Alphabet's (NASDAQ: GOOGL) Google and Apple Inc.

The company boasts 500 million users but among that count, only 11 million are paying for the premium service. "It's a good sign", said Robert R. Ackerman Jr., founder and managing partner of the venture capital firm AllegisCyber.

"We've always lived in a competitive environment. and importantly all our growth has happened in that environment", Houston said.

The last big unicorn to go public was Snapchat-owner Snap Inc, whose shares have cratered since the company's high-profile IPO previous year.

The underwriters for the offering are Goldman Sachs, JPMorgan, Deutsche Bank, Allen, Merrill Lynch, RBC Capital Markets, Jefferies, Macquarie Capital, Canaccord Genuity, JMP Securities, KeyBanc Capital Markets and Piper Jaffray.