Dropbox up 40% after IPO; Box -5.2%

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Dropbox Inc's (DBX.O) initial public offering, the largest tech stock debut in more than a year, was priced at US$21 per share, sources familiar with the matter told Reuters on Thursday, above the raised price range.

Dropbox makes its public debut on the Nasdaq Stock Market in one of this year's most highly-anticipated IPOs. At the start of trading on Friday, the stock opened at $29 per share.

At the time, the pricing put the company's valuation at $8.2 billion, $1.8 billion under the valuation the company received after a funding round in 2014.

Dropbox Inc co-founder and CEO Drew Houston stands outside the Nasdaq Stock Market as Dropbox is listed for the company's initial public offering at the Nasdaq Market Site in New York March 23, 2018.

"It is a very impressive set of operating metrics", said Neeraj Agrawal, general partner at tech-focused investment firm Battery Ventures, which has also invested in household-goods retailer Wayfair Inc. and software maker Marketo Inc.

Dropbox's main rival, Box, saw its shares drop as much as 5.85% after Dropbox began trading. It is heavily depended on paid services that provide more storage space and collaboration on a greater number of platforms. Its revenue has more than doubled since the year before its listing, while its losses shrank by more than half and the business became cash-flow positive. However, with a growing family of 500 million subscribers in 180 countries, only 2% (11 million) are using paid services.

The company reported revenue of $1.11 billion in 2017, up from $844.8 million a year earlier. On the other hand, the company's balance sheet still shows a bold red line, though the values are reducing. Its net loss, however, was almost halved, to $111.7 million.

Experts say that consumers will be less interested in beginning with Dropbox for their cloud storage because it has the least liberal terms among its competitors like Google, Amazon, Microsoft, and Apple. If the behemoths were to slash prices for storage, Dropbox's margins would be squeezed. And it would be hard to survive in the tech industry on an individual feature. According to Forbes, Graham advised Houston to get a co-founder onboard before submitting his application.

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