Skip to Content
Morningstar
Get 14 Days Free

Dropbox Inc Class A DBX

Morningstar Rating
Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
Is it the right time to buy or sell?
Find out with Morningstar Premium
Is it the right time to buy or sell?
Find out with Morningstar Premium

1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Dropbox Drops in Line with Our Expectations; Maintain $19 FVE; Shares Overvalued

Brian Colello, CPA Sector Director

Analyst Note

| Brian Colello, CPA |

No-moat Dropbox kicked off fiscal 2021 with financial results that were largely in line with our expectations. Dropbox continued to execute well against its three-pronged strategy of evolving existing products, developing new ones, and expanding its operating margins. The firm seeks to leverage its existing offerings and recent acquisitions, such as DocSend and HelloSign, to drive user retention and customer conversion. While Dropbox's aim to create a family of online collaboration tools is ambitious, we remain unconvinced of the firm's ability to differentiate itself in the long run or create a sustainable competitive advantage. We are maintaining our $19 fair value estimate for no-moat Dropbox. With shares trading around $25, we recommend investors wait for a pullback before committing new capital to the name.

Read Full Analysis

Company Profile

Business Description

Dropbox provides cloud-based file storage, sharing, and project collaboration services for individuals and, to a lesser extent, enterprise customers. The company was founded in 2007 and offers a browser service, toolbars, and apps to upload, share, and sync files to the cloud that can be accessible across a number of devices and by a multitude of users. Dropbox allows users to store and access documents, videos, and photos.

Contact
1800 Owens Street
San Francisco, CA, 94158
T +1 415 857-6800
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 2,760

Related

Fund Spy
Manager Question of the Month: How Much Attention Do Managers Pay to Rival Trades?
Stock managers especially watch large investors, activists, and insiders.
Drew Carter
Our Picks
9 Stocks to Avoid in a Struggling Economy
Walk away from these richly trading no-moat names with negative moat trends.
Susan Dziubinski
Premium Article
5 Stocks to Forget
These names have all suffered double-digit losses during the past year yet remain overvalued by our metrics.
Susan Dziubinski
Our Picks
7 Stocks to Avoid
These stocks are all extremely overvalued by our standards--and carry high uncertainty ratings, too.
Susan Dziubinski
Stock Analyst Update
Overvalued Dropbox Issues Tepid Guidance
We continue to be concerned about Dropbox's competitive position in what we believe will be a commoditized cloud storage industry.
John Barrett
Stock Analyst Update
Steer Clear of Overpriced Dropbox
Commodification of storage technology will inhibit the firm from driving growth through price increases ahead.
William Fitzsimmons
Stock Strategist Industry Reports
How Blockchain Affects Our Coverage
We believe companies with moats from switching costs and intangible assets are less vulnerable.
Jim Sinegal
Our Picks
4 Extremely Overpriced Stocks
We think these companies' share prices are pricing in overly optimistic expectations.
Karen Wallace
US Videos
Dropbox Hasn't Built a Moat
Facing extensive competition from much larger firms, we think Dropbox will face headwinds and see shares debuting at too rich of a price.
William Fitzsimmons

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.