First big tech IPO of 2018 close as Dropbox raises price range

First big tech IPO of 2018 close as Dropbox raises price range

Cloud storage firm now expects the offering to be priced between US$18 and US$20 per share

Dropbox raised the price range for its initial public offering by US$2 on Wednesday as investors bid strongly for the first big tech IPO this year ahead of final pricing expected on Thursday.

The cloud storage firm now expects the offering to be priced between US$18 and US$20 per share, up from its previous range of US$16 to US$18.

The new price range suggests the company, co-founded by Andrew Houston and Arash Ferdowsi in 2007, could have a market capitalisation of up to US$8.7 billion based on a fully diluted share count and the IPO could raise up to US$720 million.

"The initial file price range was quite conservative relative to the valuations placed on comparable firms, such as Box," said Jay Ritter, an IPO expert and professor at the University of Florida.

Despite the bump in price, Dropbox's market cap is still below the US$10 billion valuation that it commanded in a 2014 private funding round.

Dropbox's IPO is being closely watched by the investment world to gauge market appetite for tech unicorns - young companies valued at more than US$1 billion.

The last big unicorn to go public was Snapchat-owner Snap, whose shares have cratered since the company's high-profile IPO last year. The stock closed a dollar below its IPO price of US$17 on Tuesday.

Dropbox's IPO comes on the heels of a strong market debut of cyber security firm Zscaler, which had also raised the size and price of its offering.

Music streaming service Spotify, valued at roughly US$19 billion in the private markets, has also filed for a direct listing and will debut on the NYSE on 3 April.

Dropbox's increase in IPO price range bodes well for Spotify, said Michael Carvin, CEO of personal finance technology firm SmartAsset. "They will be watching this closely as they look towards their own debut."

A direct listing lets investors and employees sell shares without the company raising new capital or hiring a Wall Street bank or broker to underwrite the offering.

In contrast, San Francisco-based Dropbox has hired JPMorgan and Goldman Sachs, among others, for its IPO.

The order book for the offering closes at midday on Wednesday and the pricing is expected on Thursday.

Sources told Reuters on Monday that the offering was oversubscribed.

The company has 500 million users and competes with Alphabet’s Google, Microsoft,, with Box as its main rival.

The stock will start trading on the Nasdaq on Friday.

(Reporting by Sweta Singh, additional reporting by Nikhil Subba in Bengaluru; Editing by Anil D'Silva and Saumyadeb Chakrabarty)

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