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Dropbox Inc Class A DBX

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Morningstar’s Analysis

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Economic Moat




Dropbox Reports Uptick in Usage as Consumers Adapt to Remote Work Environment; Maintaining $15 FVE

Brian Colello, CPA Sector Director

Analyst Note

| Brian Colello, CPA |

No-moat Dropbox reported strong second quarter results, as revenue exceeded our expectations and adjusted earnings per share surpassed CapIQ consensus estimates. Like other tech companies offering cloud storage and online collaboration tools, Dropbox has seen an increase in usage as work from home continues to be commonplace. However, we still believe that in an increasingly commodified market of cloud storage and work collaboration tools, Dropbox cannot compete with its well-capitalized competitors such as Microsoft and Google. As a result, we are maintaining our fair value estimate of $15 per share. Shares fell 5% after hours, yet we continue to view them as overvalued and would recommend waiting for a larger pullback before committing capital to the name.

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Company Profile

Business Description

Dropbox provides cloud-based file storage, sharing, and project collaboration services for individuals and, to a lesser extent, enterprise customers. The company was founded in 2007 and offers a browser service, toolbars, and apps to upload, share, and sync files to the cloud that can be accessible across a number of devices and by a multitude of users. Dropbox allows users to store and access documents, videos, and photos.

1800 Owens Street
San Francisco, CA, 94158
T +1 415 857-6800
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 2,801