Published: Tue, March 13, 2018
Money | By Ethel Goodwin

Dropbox is staring at a downround IPO

Dropbox is staring at a downround IPO

Investors, analysts and - perhaps most importantly - other big privately held tech companies will be closely watching Dropbox's initial public offering to see how interested investors are in the latest batch of so-called unicorns. The offering could raise almost $650 million for the San Francisco-based company and values Dropbox at $7.1 billion.

Dropbox also agreed to sell $100 million worth of shares to Salesforce in a private placement concurrent with its IPO.

Dropbox will trade on the Nasdaq stock market under the ticker symbol "DBX". Though the company continues to lose money, it has reduced the red ink on its books, losing $111.7 million a year ago.

The cloud storage and file sharing behemoth is selling 36 million shares, priced between $16-18 per share, according to an updated SEC filing on Monday.

"With two-way workflows, content stays relevant and up-to-date, whether the user is working in Dropbox or Salesforce", the companies said in a joint statement.

Though analysts have long anxious about the prospects of independent file-storage providers like Dropbox and Box, a competitor that went public three years ago, the companies have shown that they can survive. The company posted revenue of $1.1 billion on a net loss of $111.7 million.

A Dropbox IPO is in the works and InvestorPlace has a few things that potential investors might want to know. It has more than 500 million users in more than 180 countries and reported around $1.1 billion in revenues in 2017, up from $845 million the previous year.

"Dropbox's S-1 form Dropbox that it filed with the Securities and Exchange Commission showed that it lost $111 million on revenue of $1.1 billion a year ago", said BI. But most use the free service - about 11 million are paying customers.

The company has adopted a three-tier share system in which co-founders Arash Ferdowsi and Drew Houston own a majority of the Class B shares that have no financial rights but have 10 votes for every Class A share vote. Sequoia Capital is the largest shareholder among outside investors, with about a 25 percent stake.

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