Published: Sun, March 25, 2018
Money | By Ethel Goodwin

Dropbox raised the price range for its IPO

Dropbox raised the price range for its IPO

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. The question, however, is whether Dropbox will end up behaving as SNAP has, ultimately puttering out and hovering at or below its IPO price.

Dropbox has made a public offering this time around. At the start of trading on Friday, the stock opened at $29 per share. That range was above the initial $16 to $18 range the company proposed earlier in the month, indicating strong investor interest in the offering. "One of the most rewarding things about this process of getting ready to go public was investors finally starting to understand it".

Shares trading under the symbol DBX rallied 35.6 per cent to close at US$28.48, with intraday gains as much as 50 per cent, following the offering price of US$21.

Dropbox shares traded up 42 percent from their IPO price at 12:34 p.m.in NY, valuing the company at $11.7 billion. For example, Andrew Houston, the co-founder and CEO, will have 24% of the company, while the the venture-capital firm Sequoia Capital will own a 25% stake. The 32-year-old Kansas native joins co-founder and Chief Executive Officer Drew Houston in the three-comma club.

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

Dropbox reported revenue of US$1.11 billion in 2017, up 32 per cent from a year earlier. The money-losing meal-kit delivery company raised less than expected at a $2 billion valuation, 38 percent lower than its last private round. The company has a positive cash flow and is edging close to producing a profit, while revenue growth is over 30% higher than past year.

The company competes with much larger technology firms such as Google, Microsoft and Amazon.com. Its full-year net loss almost halved from the $210.2 million in 2016.

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.

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