San Francisco-based, cloud-storage provider Dropbox, led by founder and CEO Drew Houston, began trading on NASDAQ today, March 23, with an initial share price of $21 — higher than many expected. While the IPO places Dropbox’s (DBX) value at nearly $9.2 billion, that’s still somewhat lower than the $10 billion valuation DropBox had during its last round of private funding in 2014.
With individuals and businesses alike generating and managing ever-more data — think everything from expense reports and vacation selfies to term papers and customer service records — few can doubt there’s a real market for cloud-based storage services like Dropbox. But the 11-year-old company’s initial public offering today opens up a wide variety of new questions regarding Wall Street’s expectations for the firm.
Among those questions: Can Dropbox move a larger segment of its users from free consumer accounts to paid premium services? Does Dropbox offer enough appeal for enterprise users with more demanding technology and service requirements? And, can Dropbox differentiate itself enough from a very large field of competitors to make it as a publicly traded company?
Large User Base, Though Not All Paid
Founded in 2007, Dropbox has expanded its initial cloud-based file sharing and storage offering through a variety of partnerships and acquisitions. It currently claims some 500 million users, although many are consumers with free subscriptions. The company’s total paid user base of 11 million includes around 150,000 businesses.
In its July 2017 Magic Quadrant report on content collaboration platforms, analyst firm Gartner placed Dropbox in the “Leader” category along with competitors like Box, Microsoft, Citrix, and Google. Gartner rated Dropbox highly for the speed and reliability of its software, but offered cautions about Dropbox technical support and integration capabilities. It also noted that, unlike some storage providers, Dropbox does not allow customers to…