Cloud storage and collaboration company Dropbox — which started 10 years ago as a small startup in the San Francisco-based Y Combinator incubator program — went public today, and its shares were up nearly 36 percent as of market close this afternoon. The successful performance makes Dropbox the biggest tech IPO since Snapchat’s in March 2017. Dropbox ended the day of trading, under the ticker symbol “DBX,” with a market valuation of around $10 billion.
We knew Dropbox was likely expecting a favorable outcome, considering it priced its shares at $21, above its initial projected $18 to $20 range. But the surge in share price, which helped Dropbox match its last private funding valuation, is a welcomed vote of market confidence for a company that spent years fending off aggressive competition from the tech industry’s biggest players, including Google and Microsoft. Dropbox’s business, comprised of around 11 million paying subscribers, mainly depends on individual cloud storage plans sold to consumers, but it also sells businesses on company-wide enterprise-grade subscription plans that hinge on collaboration tools and integrations with products like Salesforce and Microsoft Office. Only about 30 percent of Dropbox’s 11 million users are on business accounts.
While Dropbox is on stable footing now, it’s still facing the biggest players in the industry in a race to the bottom as cloud storage becomes increasingly inexpensive and, in some cases, is offered to consumers for free. Dropbox has tried to diversify the kinds of products it offers, debuting a Google Docs competitor called Dropbox Paper last year, simplifying its core service even further, and partnering with the very same companies it knows threaten its business. The company is faring better than its primary competitor Box, which today suffered a 7 percent drop in share price on news of Dropbox’s debut. But going forward, Dropbox has to figure out a way to make itself indispensable to both consumers and businesses if it’s to continue growing.