Dropbox Sets Reasonable IPO Price Range

Morning Report: Dropbox set an initial price range for it impending IPO. Here’s what we now know.

This morning Dropbox, the popular file storage company, set proposed terms for its initial public offering. The company’s IPO now has the usual host of numbers: 36 million shares on offer, a 5.4 million underwriter green-shoe offering, a $16-$18 per-share price range, a maximum initial sale of $648 million at the upper end of its range and a fully-cocked $745.2 million bill including the green-shoe shares.

Of the 36 million shares on offer, 26.8 million shares will come from the company in its debut, along with 9.2 million from extant shareholders.

And all that values the firm where, precisely? Welcome to the IPO dance, as it turns out, the numbers vary:

New York Times: “At the midpoint of that range, the company would be valued at roughly $7.5 billion, factoring in restricted stock units and options. That is down from its most recent valuation of $10 billion from previous private investors.”
Bloomberg: “At the high end of that range, Dropbox would have a market value of about $7.1 billion, based on the number of shares outstanding after the offering. Including restricted stock units, the valuation would be about $7.6 billion.”
Reuters: ” Data-sharing business Dropbox Inc (DBX.O) on Monday filed for an initial public offering of 36 million shares, giving the company a value of more than $7 billion at the higher end of the range.”
FT pegs the value of Dropbox at IPO under listed terms on a diluted basis between $7 and $7.9 billion, but that publication also doesn’t like it very much when you try to quote it. So I’m writing this out instead.
TechCrunch: “The IPO pricing values the company at between $7 billion and nearly $8 billion when you factor in restricted stock units.”
WSJ: “Dropbox Inc. set a valuation target between $7 billion and nearly $8 billion ahead of its initial public offering, which is set to be one of the biggest tech IPOs in the past few years.”
CNBC: “Dropbox Inc. set terms for an initial public offering Monday that values the company as high as $8 billion. […] On a nondiluted basis, the company is valued around $6.7 billion, which is a closer comparison to what the company’s market capitalization will be when the shares begin trading next week.”
Axios: “The San Francisco-based file storage and sharing company would have a fully-diluted market value of around $7.9 billion, were it to price at the top of its range. That’s not inclusive of shares reserved for future issuance under equity compensation plans — some of which would become effective prior to the IPO. Were those shares included, the high-mark climbs to around $9.9 billion.”

So, a host of answers that peg the firm between the low and high 7s, and some numbers as high as $8 billion with Axios providing a very interesting figure; it would be cosmetically brilliant for Dropbox to be able to nearly claim a non-down IPO.

Regardless, the value of the firm seems to be generally pegged at around $7.5 billion, so long as we trail that initial figure with a host of caveats, including the fact that we are looking at a proposed range and not the final value of the firm. At the same time, Crunchbase News did some work after Dropbox filed and came up with a little guess as to what the firm might be worth using Box as a market cognate:

So that went well, but it ended built a bit on false premises. Indeed, after we published that piece Box missed its forecast and was dramatically repriced by the public markets. That undercut the above-quoted math that we used to generate a $7.5 billion valuation estimate for Dropbox. However, the firm is still shooting for roughly that valuation.

So, Dropbox is effectively pricing itself at Box’s pre-correction ARR multiple, meaning that it will get a premium to Box that it nearly certainly wanted. Just perhaps not the interval it had originally anticipated.

Update: Amended the Axios quote to a longer riff.