File hosting service storage Dropbox saw its shares soar more than 40% in its market debut on Friday, with investors rushing to get their hands on a piece of the biggest tech IPO in over twelve months.
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The IPO raised $756 million, pricing 36 million shares at 21 apiece Thursday evening, above an upwardly revised price range of 18 to 20.
According to Reuters, on Wednesday Dropbox raised the price range for its initial public offering by $2 on “strong demand”. But this year, the IPO price of Dropbox was a little bit on the higher side.
In addition, Dropbox has granted the underwriters a 30-day option to purchase up to 5,400,000 additional shares of Class A common stock at the initial public offering price less underwriting discounts.
DropBox enters the business with having a good amount of consumers, but the giants like Google and Apple making an impact in the cloud storage industry have pushed back DropBox to backfoot.
Today, Dropbox has 500 million registered users across 180 countries, who collectively have made 4.5 billion connections to share content. The company was founded in 2007 by Mr. Houston and Arash Ferdowsi. The company has a positive cash flow and is edging close to producing a profit, while revenue growth is over 30% higher than past year. The new price range suggests the company could have a market capitalization of up to $8.7 billion and the IPO could raise up to $720 million.
It also makes Dropbox’s IPO the biggest for a tech company since Snapchat’s parent company Snap went public in March 2017. For example, Andrew Houston, the co-founder and CEO, will have 24% of the company, while the the venture-capital firm Sequoia Capital will own a 25% stake.
Dropbox provides a service that lets users store, share and collaborate on documents, photos and other files online. Its losses have narrowed to $112 million a year ago from $326 million in 2015, and the company says it is moving toward becoming profitable. The company can also boast .1 billion in revenue with 11 million paying users.
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Like Snap, Dropbox warned potential investors that it may never be profitable. Goldman Sachs, JPMorgan Chase, Deutsche Bank and Allen & Co. led the offering.
