Dropbox Enters the Market With a Bang (UPDATED)

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Dropbox Inc. (NASDAQ: DBX) entered the market with a bang on Friday. The stock opened at $29 per share, well above its pricing of $21. However, it did not stop there. The stock closed the day just under $28.50.

The company originally expected to price the stock in the range of $16 to $18 per share, although this was raised to $18 to $20, and eventually priced at $21, above both ranges. Some 36.0 million shares were sold in the offering, with an overallotment option for an additional 5.4 million shares. Dropbox is putting up 26.8 million shares and selling shareholders offering the remaining 9.2 million shares.

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.

This company is a global collaboration platform, with which more and more of this content is created, accessed and shared with the world. It serves more than 500 million registered users across 180 countries.

Ultimately, management believes the need for its platform will continue to grow as teams become more fluid and global and content is increasingly fragmented across incompatible tools and devices. Dropbox breaks down silos by centralizing the flow of information between the products and services its users prefer.

In a recent SEC filing, Dropbox detailed its finances as follows:

Our revenue was $603.8 million, $844.8 million, and $1,106.8 million in 2015, 2016, and 2017, respectively, representing an annual growth rate of 40% and 31%, respectively. We generated net losses of $325.9 million, $210.2 million, and $111.7 million in 2015, 2016, and 2017, respectively. We also generated positive free cash flow of $137.4 million and $305.0 million in 2016 and 2017, respectively, compared to negative free cash flow of $63.9 million in 2015.

The company intends to use the net proceeds from this offering to pay down its debt, with the remainder going toward working capital and general corporate purposes.

Shares of Dropbox reached as high as up 50% over the course of the day with a range of $27.84 to $31.60 in the session. The stock closed at $28.48 with 55.6 million shares having moved on the day.

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