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Valuation a sign of overheated tech market

Wednesday, March 14, 2018

DROPBOX Inc on Monday offered a price range for shares in its initial public offering that would value it at up to $US7.1 billion ($F14b), nearly a third below the valuation it commanded in 2014, a clear sign of how overheated the private tech market became a few years back.

Cloud storage company Dropbox is the largest tech IPO after a protracted dry spell, and investors are carefully watching it for signs of how other highly valued tech companies will be received by the public markets.

If Dropbox is a barometer for public market sentiment, it appears that investors will not endorse the valuations that many billion-dollar-plus startups now command.

The spring calendar for technology offerings is relatively busy, including cyber security company Zscaler's planned debut later this week and music company Spotify's expected listing early next month.

San Francisco-based Dropbox set a price range of $16 to $18 per share, which would raise up to $US648 million ($F1.3b) in the highly anticipated public offering planned for Friday.

The range serves as guidance, and the company will set a final price, based on investor feedback, on the eve of the IPO.

The pricing is about a 30 percent drop from the $US10b ($F20b) valuation Dropbox earned in early 2014 after a financing round led by BlackRock Inc.

The company, which started as a free service to share and store photos, music and other large files, has raised more than $US600m ($F1.2b) from private investors.

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