Sources: New Constructs, LLC and company filingsĭropbox is at a disadvantage when it comes to competing for its competitors’ users.įor instance, Apple offers all of its customers 5 GB of free space through iCloud. The market also expects Dropbox to lose more market share given that the global cloud storage market is expected to grow much faster (by 22% compounded annually from 2020 to 2025).įigure 1: Dropbox’s YoY Revenue Growth Since 2016 Consensus estimates show that the market expects the firm’s revenue growth rate to decline from 14% in 2020 to just 10% in 2022. While Dropbox has grown revenue from $845 million in 2016 to $1.8 billion TTM, the firm’s year-over-year (YoY) revenue growth rate has fallen from 40% to 18%.

Doing the math: the stock price implies Dropbox can acquire 44 million paying users, equal to 30% of Amazon Prime members and 22% of Microsoft Office 365 subscribers.Competition deeply already integrated with target users.This report helps investors of all types see just how extreme the risk in DBX is based on: Investors with fiduciary responsibilities should consider the deteriorating fundamentals, weak competitive position, and the unrealistic user growth implied by the current valuation. While this stock has outperformed as a short, it could fall much further. Since we first placed it in the Danger Zone, DBX is down ~8% while the S&P 500 is up 24%.

We first warned about Dropbox prior to its IPO in March 2018, and again in September 2018 and August 2019. Fiduciaries should avoid this week’s Danger Zone pick: Dropbox Inc. Entrenched competition is well-positioned to take more market share, but the stock is priced for just the opposite. Learn more about the best fundamental researchĭespite years of rapid revenue growth and reaching profitability, the future for this cloud-based storage provider is murky at best.

Box vs dropbox 2016