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Dropbox Overviewĭropbox offers several subscription plans that cater to their diverse group of clients, which include both individuals and enterprises. Considering their relatively cheap valuation when looking at forward P/E, this could be a potential for significant value.įor example, if we use Yahoo Finance's 2022 EPS estimate of $1.35 and use a forward P/E multiple closer to 30x, rather than the current 23x, this could yield a take-out price of $40. One Wall Street Journal article speculated that Elliott likely owns a stake of more than 10% and while speculation over what Elliott Management could end up doing with Dropbox is unknown, I see this as more of a positive catalyst than a negative one.Įlliott Management has a track record of solid execution with their investments and I believe with them being an activist hedge fund, there are more opportunities for Dropbox to be acquired than before. With the stock's short interest still hovering around 10%, the recent news of Elliott Management's investment could subdue some of this pressure. Investors should look more closely at this name as we head into Q2 earnings as this could be a long-term secular cloud winner. However, using pretty conservative estimates and assuming the stock's forward P/E multiple remains consistent, there is a clear path towards a $40 stock over the next 12-18 months. The stock's revenue growth is good at around 10%, but it becomes a little more difficult to value based on a forward revenue multiple. Given the company's strong operating model and impressive margins, I continue to see upside to the stock even when looking at more traditional P/E valuation method. In a time where more companies are open to a work from home environment, having effective document storage and sharing capabilities is becoming a requirement to operate smoothly. In essence, they provide cloud-based storage for users, making it easier and more efficient for companies to store and share their documents.

Despite the rocky start to their public life, I believe the solid fundamentals and attractive valuation will drive further upside to the company over time.ĭropbox allows users to store, share, and collaborate documents and has become a big benefactor of the global pandemic and shifting trends in work from home.

Despite a few years of some turbulence after reaching a low point of under $17 in late 2019 the stock has eclipsed their opening price and is now trading above $30. Funky-data/iStock Unreleased via Getty Imagesĭropbox ( NASDAQ: DBX) originally went public in March 2018 at a price of $21, though officially opened at $29.