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Dropbox IPO priced higher than expected on strong demand
[BENGALURU] Dropbox Inc's initial public offering, the largest tech stock debut in more than a year, was priced at US$21 per share, the company announced on Thursday, higher than expected.
At US$21, the San Francisco-based company will have a market cap of about US$9.18 billion on a fully diluted share count.
The cloud-based file-storage firm on Wednesday raised the expected price range by US$2 to US$18 to $20 per share, on the back of strong demand.
The IPO raised about US$756 million in the largest tech IPO since Snap Inc raised US$3.9 billion in its debut last year. Dropbox shares are set to start trading on Friday at the Nasdaq under the symbol "DBX". The strong pricing bodes well for other highly anticipated IPOs from tech unicorns, or startups valued at more than US$1 billion.
"Pricing above the revised range indicates there is more demand than supply for growth technology IPOs especially those generating substantial positive free cash flow," said Leslie Pfrang of Class V Group, an IPO advisory firm.
Streaming music leader Spotify Technology is scheduled to do a direct listing of shares on the New York Stock Exchange on April 3.
Dropbox has 500 million users and competes with Alphabet Inc's Google, Microsoft Corp, Amazon.com Inc and Box Inc, which had a market value of about US$3.1 billion as of Thursday's close.
"For me the biggest problem I have with Dropbox is they don't have any unique competitive advantages or proprietary offerings that differentiate them from the pack," said Adam Sarhan of investment advisory service 50 Park Investments.
Dropbox co-founder and chief executive officer Andrew Houston will have a 24 per cent of the company after selling 2.3 million shares in the offering.
Venture capital firm Sequoia Capital will retain a stake of about 25 percent.
Dropbox reported revenue of US$1.11 billion in 2017, up 32 per cent from a year earlier. Its full-year net loss, meanwhile, nearly halved to $111.7 million.
Goldman Sachs & Co LLC, JP Morgan, Deutsche Bank Securities, Allen & Company LLC and Bank of America Merrill Lynch are among lead underwriters to the offering.