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It’s worth noting that any deal that only achieves a 6% ROIC would not be accretive, as the return on the deal would equal Salesforce’s WACC. Consequently, these firms can offer cloud storage for free and still make plenty of money while Dropbox must make money on cloud storage. TOP COMPETITORS OF Dropbox IN Datanyze Universe . Most of Dropbox’s competition is more profitable too. Google Drive is the next in line with 27.27% market share. The number of shares sold short has increased by 4% since last month. I use the higher estimates in scenario two to illustrate a best-case scenario where I assume Dropbox could grow revenue faster while being integrated within Salesforce’s existing business. Dropbox is at a disadvantage when it comes to competing for its competitors’ users. The leading region in the Cloud Storage Industry was North America with a 42% cloud storage market share in 2017, followed by Europe with 28% cloud storage market share, Asia-Pacific with 25%, and the rest of the world with 5%. Even in the most optimistic of scenarios, Dropbox is worth less than its current share price. Launched on April 24, 2012, Google Drive allows users to store files in the cloud, synchronize files across devices, and share … To further illustrate the extraordinarily high growth expectations embedded in Dropbox’s stock price, I compare Dropbox’s implied paying users to the paying users of competitors. I also optimistically assume Dropbox achieves a 4% NOPAT margin, which is above Dropbox’s TTM margin of 2% and Salesforce’s TTM margin of 1%. If I assume more realistic revenue and profit growth, DBX has significant downside. Leading media outlets regularly feature our research. footnotes) of hundreds of thousands of financial filings to unearth critical details. Opinions expressed by Forbes Contributors are their own. For those who don’t need a lot of storage, Dropbox Basic is a free plan with 2 GB of storage. Decline of Dropbox . Elite money managers, advisors and institutions have relied on us to lower risk and improve performance since 2004. On The Basis Of Product, The Private Cloud Storage Market Is Primarily Split Into. Dropbox makes moving between personal, business, and enterprise-level plans easy by transferring your account to the new plan without changing file configurations.Google Drive for Business plans start at 30GB of storage per user at the Basic level, while Business and Enterprise plans give users unlimited storage with some extra features. Figure 4 shows that Dropbox offers neither the most storage nor the cheapest storage (excluding free tiers). Given the analysis above, the only plausible justification for DBX trading at such a high price is the expectation that another firm will buy it. Once you’ve downloaded the Dropbox app on your computer, simply drag and drop the files you’d like to back up into the Dropbox folder on your desktop. One of the most notable adjustments was $20 million in operating leases. The stock will also likely sink should any of its competitors get more aggressive and offer more cloud storage at even lower prices so that Dropbox’s value proposition gets only weaker. The cloud storage market size is valued at $46.25 billion in 2019 and is expected to reach $222.5 billion by 2027, with a CAGR of 21% from 2020 to 2025. He was a 5-yr member of FASB's Investors Advisory Committee. Acquisitions completed at these prices would be accretive to Salesforce’s shareholders. Figure 8: Dropbox’s Revenue and Core Earnings Since 2016, Dropbox Is Priced to Reach 44 Million Paying Users or 30% of Amazon Prime Members. Entrenched competition is well-positioned to take more market share, but the stock is priced for just the opposite. Figure 10: Dropbox’s Implied 2027 Average Paying Users vs. Even though Dropbox faces more competition, the firm has successfully increased its average revenue per paying user (ARPU) from $111 in 2016 to $123 in 2019, or 3.6% compounded annually. One of our most used categories is Cloud Storage. Top Leading Companies of Global Private Cloud Storage Market are Amazon Cloud Drive, Ubuntu One, Apple iCloud, Dropbox, Google Drive, Box, Microsoft SkyDrive, MediaFire, SpiderOak, Mega and others. Figure 3 shows some of Dropbox’s direct competitors and their number of users, who have access to a free version of what Dropbox offers. However, upon closer look, Dropbox’s free cash flow fails to reflect the true economics of the business. The Appendix details exactly how we stack up. Sharing. Combining human expertise with NLP/ML/AI technologies (featured by Harvard Business School), we shine a light in the dark corners (e.g. A new report by Unified API integration leader CloudRail shows that Dropbox leads the consumer cloud storage market with 63.8%, ahead of Google Drive, OneDrive and Box of all users choosing their service.. A newer version of this report is available: Cloud Storage Report 2017 CloudRail, a leader in API integration management solutions for app developers, released a new report analyzing … Critical Details Found in Financial Filings by My Firm’s Robo-Analyst Technology. If Dropbox cannot outgrow the competition in such a favorable environment, will it ever? Dropbox (DBX) is a pioneer of cloud storage. Dropbox ties its long-term performance awards directly to the performance of the firm’s stock by issuing time-based restricted stock units that vest over multi-year periods. EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, Michigan Economic Development Corporation With Forbes Insights, Casey’s Stock Looks Expensive In the Long Run, Face Reality: Pit Yourself Against Nasdaq 100, Dow Jones Today: Stocks Erase Losses, Coronavirus Variant Vaccine Possible; Apple Thinking Of Apple Car, Apple’s Rumored EV Project Is A True Threat To Tesla’s Hype Machine, MDU Resources: Low Risk Bet On An Infrastructure Boom, Virus Stimulus Bill Mandates Pointless Pollution Study, Auto Retailer Drives Lower After Q3 Report, See the math behind this reverse DCF scenario, directly correlated with creating shareholder value, Competition deeply already integrated with target users, 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, Grow revenue at 17% (vs. average consensus estimates from 2020 to 2022 of 12%) compounded annually over the next eight years, Immediately achieve a 7% (vs. Amazon’s TTM margin of 5%) NOPAT margin, Grow revenue at 11% (equal to 2021 consensus estimate) compounded annually over the next eight years, Immediately achieve a 4% NOPAT margin (double TTM margin of 2%), $864 million in operating leases (11% of market cap), $18 million in outstanding employee stock options (<1% of market cap), Deeply embedded competition with deeper pockets, Lack of significant and durable competitive advantages, Valuation implies massive paying user growth, PartnerSelect Smaller Companies Fund (MSSFX) – 2.7% allocation and unattractive rating, Catalyst Buyback Strategy Fund (BUYCX) – 2.6% allocation and very unattractive rating, Columbia Seligman Comm & Info Fund (SLMCX) – 2.0% allocation and unattractive rating, Columbia Seligman Global Technology Fund (SHGTX) – 2.0% allocation and unattractive rating. While core earnings fell from -$58 million in 2018 to -$67 million in 2019, they rose to $17 million over the TTM. Growing registered and paying users is a serious uphill battle for Dropbox since most of its potential paying users are already customers of firms that provide the same service as Dropbox along with many other important services. This paper compares our analytics on a mega cap company to other major providers. Dropbox market share in the Datanyze Universe. Combining human expertise with NLP/ML/AI technologies (feat. Dropbox has generated negative economic earnings in each of the past four years. In this scenario, Dropbox grows NOPAT from -$43 million in 2019 to $163 million in 2027, and the stock is worth just $7/share – a 63% downside. The past ten quarters or so Risk and improve performance Since 2004 has saturated its cloud-storage market memory,! 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