- Activist fund Elliott Management has procured over 10% stake in Dropbox Inc DBX, valued at over $800 million, becoming the cloud storage group's biggest institutional shareholder by beating Vanguard Group, the Wall Street Journal reported.
- CEO Drew Houston is the biggest shareholder of the company.
- Dropbox's modest valuation of $11 billion compared to cloud peers like Salesforce.com Inc CRM and ServiceNow Inc NOW has fueled takeover speculation.
- The speculation was intensified by Salesforce's plans of acquiring Slack Technologies Inc WORK in 2020 for $27.7 billion. KKR & Co Inc KKR and Clayton Dubilier & Rice LLC recently confirmed an agreement to acquire Cloudera Inc CLDR for $5.3 billion.
- Cloud service companies that failed to capitalize on the pandemic induced remote working trend became obvious activist targets, Financial Times reports
- Dropbox 2020 revenue rose 15% year-on-year to $1.9 billion. It has over 700 million registered users.
- The company's Q1 2021 revenue rose 12% Y/Y, and it announced a new $1 billion share buyback approval.
- Wall Street sees FY21 revenue growth of 10%.
- Investors have doubted Dropbox's growth prospects as its service became chargeable, and it does less business with lucrative corporate customers compared to peers. Dropbox laid off around 11% of its workforce in January despite announcing indefinite remote working for most of them.
- The share prices have mostly traded below the 2018 initial public offering price.
- Price action: DBX shares traded lower by 1.04% at $27.57 in the premarket session on the last check Thursday.
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