The Dropbox IPO is one of the most talked about offerings that has happened this year thus far, and for good reason. Dropbox is a massive company with a blue chip valuation. Well, that valuation just got a whole lot bigger as the Dropbox IPO just got quite a bit more expensive. Today, we’ll talk about the news, why the increase is actually a pretty good sign for Dropbox, and what you should be watching for ahead.
Dropbox Increases IPO Price
As mentioned above, the latest news that we’ve gotten with regard to the IPO of Dropbox has to do with the price. In recent news stories, we’re seeing news that Dropbox has made the decision to increase the price of its IPO.
Previously, Dropbox announced that it has decided upon a price for its IPO. At the time, the company set the initial IPO price range to be between $16 and $18 per share. This gave the company the expectation of raising approximately $648 million through the offering.
However, on Wednesday, the company announced that it has decided to increase the IPO price. Now, if you want to get in on the IPO, you’re going to apy somewhere between $18 and $20 per Dropbox share. As a result of the increased price per share, the company is now expecting to raise approximately $720 million, just under 10% of the total valuation of the company at $7.8 billion.
Why The Increase In The IPO Price Is Good News For Dropbox
While at first glance, this may not seem like such good news, it’s great news for Dropbox and a very positive sign for the IPO. There are multiple reasons for this:
- Larger Amount Of Funds Raised – First and foremost, let’s not forget the reason for an IPO in the first place. In general, companies go public in an attempt to raise funds, and a whole lot of them. Even if the IPO price was to stay at the lower initial number, Dropbox would have raised an incredible amount of money. However, with $2 more per share in mind, the company is likely to raise an additional 72 million.
- Shows Strong Demand – At the end of the day, if Dropbox wasn’t confident that the demand would be strong for its IPO, it wouldn’t go raising prices. After releasing the initial price of between $16 and $18 per share, the company has made the decision to increase the price after just about a week. This suggests that Dropbox has crunched the numbers based on reactions to the initial pricing, deciding that the demand was there for an increase. That’s great news.
What To Watch For Ahead
Moving forward, Dropbox is likely to present several potentially profitable opportunities. After all, it is one of the most talked about IPOs in some time. Adding in the fact that demand is already high enough to warrant a price increase on the shares, makes this an even more exciting even.
With that said, if you’re looking to get involved in the Dropbox IPO, there are a few things you should be watching for. First and foremost, pay attention to the news surrounding the price increase. Soon enough, we should see stories with regard to demand that tell us whether or not this was the right move relatively soon. Also, do some due diligence with regard to the valuation of the company. Is a $7.8 billion valuation really worth it when the company hasn’t produced a penny in profit??? While I can think of several examples where historically, the answer has been yes, that doesn’t mean that that’s the case here. So, before getting involved, make sure to do your research and understand just what you are purchasing when you buy shares.
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