Dropbox to Launch Initial Public Offering at Range of $16-$18

American file hosting service company Dropbox Inc announced its plans to become public last week and offer around 36 million Class A shares at $16 to $18 each valuing the company at around $7.1 billion. This was revealed at the company’s filing with the U.S. Securities and Exchange Commission Monday last week. 

Dropbox began back in 2014 and started as a storage company offering 2GB worth of space to users for free. The online storage service which offered an upgrade for a certain amount has then attracted private investors to investing as much as $600 million in the company. The company have been able to raise as much as the said amount due to the bright outlook of its earnings that attracted mutual fund investors and hedge funds.

The company based in San Francisco which was initially expected to launch its IPO last Friday is expected to officially start offering its shares and become public this coming week. The highly anticipated IPO launch was stated to be one of the biggest tech IPOs since Snap Inc. Dropbox initially hinted its plans to go public last year when it opened a credit facility worth $600 million from six banks. By then, the company has also met with a number of financial institutions in preparation for its public share listing.

Dropbox is expecting to raise around $648 million during its initial public offering. The IPO share price will be decided by the company prior to its official launch. Following the IPO, Dropbox valuation is expected to come at around $7.5 billion which would include options and stocks that are restricted. The company has been valued by as much as $10 billion as a private company a couple of years ago when startups were known for pushing their valuation to their limits.

Dropbox Inc to list shares publicly

Low Profitability

Despite the bright outlook on the IPO offering of the company, some analysts have warned against the possibility of the company’s shares to be unprofitable during its first stages. The company which recorded more than $1 billion in revenue since 2016 has recorded only 11 million of its users are paying for their services out of more than 500 million using the service in over 180 countries around the world leading to huge losses for the company.

This concerned investors on whether the company may be able to generate a higher revenue than its current performance. This is despite the considerable growth of the company’s revenue and earnings over the past couple of years. Two years ago, Dropbox posted $325 million in losses, and $111 million last year in the midst of the company’s rising revenues.

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