Dropbox reins in IPO goals

Silicon Valley darling Dropbox is aiming to go public at a valuation well below the $10 billion it clocked in its last private funding round, despite posting healthy revenue growth and turning cashflow positive in the intervening four years.

The file-sharing company is targeting a public market capitalization of $6.3 billion to $7.1 billion in its initial public offering, according to a filing Monday. Including restricted stock units, that range is $6.7 billion to $7.6 billion.

The company is one of a class of well-funded, closely watched technology companies that have achieved a private valuation of more than $1 billion. Investors wanting to get their hands on the next big thing piled into these so-called unicorns in recent years, helping drive up valuations.

The gap between private valuations and public market aspirations highlights the disconnect between the premium that private investors put on potential innovation, and the financials-based analysis that public market shareholders are focused on.

This year has seen an early surge in public offerings with $8 billion of new stock sold in the U.S. in January alone, the biggest month since Alibaba raised $25 billion in its September 2014 IPO, according to data compiled by Bloomberg. Still, listing flops in 2017 from Snap Inc. and Blue Apron Holdings Inc. — who have both traded below their last private valuation — are fresh in investors’ memories.

San Francisco-based Dropbox is aiming to raise as much as $648 million in its U.S. IPO, marketing 36 million shares of Class A common stock for $16 to $18 apiece, according to the filing with the Securities and Exchange Commission.