Boxing clever

Dropbox share value soars on its market debut

Hannah Boland

James Titcomb

DROPBOX topped its private valuation in its debut yesterday, as shares in the file sharing company surged by as much as 50pc on New York’s Nasdaq exchange.

The stock, priced at $21, started trading at $29 apiece, shooting up as high as $31.60 at one point. They closed at $28.48, giving Dropbox a market value of $11.2bn (£7.9bn), exceeding the $10bn price tag it had received at its last private funding round in 2014.

It marks a turnaround for the group, which earlier this month had said it was targeting a valuation of around $7bn – a decision one private equity firm had described as a “slap in the face” to investors of the 2014 round. Dropbox had hiked the price range earlier this week. The debut saw cofounder Arash Ferdowsi’s net worth hit $1.1bn, becoming the second billionaire within the Dropbox team, after fellow co-founder and chief executive Drew Houston. Engineering chief Quentin Clark said while the firm had been preparing for the float for “quite a while”, the turmoil amid technology stocks had given it some pause for thought.

“Definitely yesterday I think there were some long conversations about the reality we’re doing this in, [but] Dropbox’s business is above that noise in the market,” he said.

The tech-heavy Nasdaq this week lost almost 490 points, hitting its lowest level since early February. News of Facebook’s data breach had caused ripples across the technology companies, with fears it could prompt tougher regulation. Dropbox’s IPO is also likely to reassure investors in other emerging technology giants considering floats, such as Spotify and Deliveroo.

However, unlike many technology firms when they have gone public, Dropbox is cash flow positive and is close to moving into the black. In 2017, it generated $1.1bn in revenue, up 30pc on 2016, helping its net losses to narrow to $112m from $210m. It has around 500m registered users.