PreMarket Prep Stock Of The Day: Dropbox

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

There are several catalysts that can move an issue higher. One that flies under the radar sometimes is insider buys. A large insider purchase in Dropbox DBX last week has added more momentum to the move.

Not The Greatest IPO: Dropbox made its Wall Street debut in March 2018 at $29. It put in a pair of lows in its first two sessions ($27.84 and $27.75) and began to move higher. After hovering at the $30 area for a few months it had a great five-day run in June 2018.

After ending its June 11 session at $30.10, it made its all-time high ($43.50) and all-time closing high on that same day at $42 and quickly surrendered a majority of those gains. Only eight days later it swooned to $30.65 and mounted a rebound.

Once the issue breached its IPO low in July it went into an extended decline with intermittent rebounds. However, its ultimate low wasn't made until March 2020 at $14.55. By year-end, it clawed its way back to $22.19.

Holding Steady Until March: Although it rallied up to $24.53 in January and $25.70 in February, it was in the vicinity of its year-end close when it ended February at $22.55. Since ending its March 3 session at $22.52, it has been higher in seven of the last eight sessions, not including Tuesday's price action.

On Friday, it had a significant bump, when there was speculation by Dealreporter regarding a possible takeover. For the week, it added just over $3 to close at $27.06.

The Catalyst: With the company possibly in play, there was another significant catalyst over the weekend. That being a director indirectly purchased 100,000 shares of this San Francisco-based company. At prices of $24.51 to $24.58 per share, that totaled almost $2.46 million. The week's close at $27.06 indicates up to a 10% gain for that director.

That news instigated another leg higher on Monday as the issue crossed $28 for the first time since September 2018, peaking at $28.25, and falling back to end the session at $27.96.

In Tuesday’s session, the issue surpassed Monday’s high, reaching $28.33 early in the session, but has fallen back under it. Bulls in the issue will want the issue to improve on Monday’s close with a potential double-top in place.

The full discussion on the issue from Tuesday’s show can be found here: