Analyst Note| Brian Colello, CPA |
No-moat Dropbox reported strong third quarter results, as revenue and adjusted EPS exceeded both our expectations and CapIQ consensus estimates. Like other tech companies offering online collaboration tools and cloud storage, Dropbox has seen increased usage as employees across the globe continue to work from home. However, in a space dominated by its well-capitalized competitors such as Microsoft, and Google, we still struggle to see long-term differentiation or a sustainable competitive advantage at Dropbox. As a result, we are maintaining our fair value estimate of $15 per share. With shares trading at a 28% premium to our estimate, we continue to view the company's shares as overvalued.