By Robert Hackett and Adam Lashinsky
March 23, 2018

Dropbox should quit right now.

In case you’re more focused on, oh, I don’t know, a looming trade war, a plummeting stock market, an imploding social-media titan, a hawkish and mustachioed national security advisor, the leader of the free world’s crumbling legal defense team, or how good it is to be Jeff Bezos, you may have missed the news Thursday that Dropbox successfully set a price for its initial public offering.

IPO pricing is an inside-baseball and archaic practice—Spotify be damned—that involves investment banking underwriters polling their clients to see who’ll buy how many shares and at what price. This all happens before a newly issued share begins trading. Dropbox, a long-in-tooth startup that sells (and also gives away) services that let users store files in the ether, had contemplated selling its shares for between $16 and $18 each. Then it suggested $18 to $20 was more likely. The final price was $21. Trading will commence Friday. (That’s when readers like you can buy and sell shares.)

Dropbox’s triumph is notable for two reasons. To have an oversubscribed deal on a day the market got hammered speaks to the enthusiasm for its shares. Dropbox doesn’t make money, but it is growing. No one is slapping a tariff on its wares or calling for it to be regulated in any novel way. As well, even at $21 per share the company’s valuation is below what private-market investors last paid. To raise $856 million, including a $100-million pre-IPO injection from Salesforce, in a “down” round is quite a feat.

Adam Lashinsky


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