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Dropbox Inc Class A DBX

Rating as of

Morningstar’s Analysis

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5-Star Price

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Economic Moat

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Capital Allocation

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Dropbox Drops in Line with Our Expectations; Maintain $19 FVE; Shares Overvalued

Brian Colello, CPA Sector Director

Analyst Note

| Brian Colello, CPA |

No-moat Dropbox kicked off fiscal 2021 with financial results that were largely in line with our expectations. Dropbox continued to execute well against its three-pronged strategy of evolving existing products, developing new ones, and expanding its operating margins. The firm seeks to leverage its existing offerings and recent acquisitions, such as DocSend and HelloSign, to drive user retention and customer conversion. While Dropbox's aim to create a family of online collaboration tools is ambitious, we remain unconvinced of the firm's ability to differentiate itself in the long run or create a sustainable competitive advantage. We are maintaining our $19 fair value estimate for no-moat Dropbox. With shares trading around $25, we recommend investors wait for a pullback before committing new 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.

Contact
1800 Owens Street
San Francisco, CA, 94158
T +1 415 857-6800
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 2,760