WSJ: Dropbox raises funding at ~$10B valuation


In the latest sign private tech valuations continue to spiral higher, the WSJ reports cloud storage/file-syncing giant Dropbox has raised ~$250M at a ~$10B valuation. A BlackRock fund is said to be the lead investor.

That figure is above the ~$8B valuation Bloomberg reported Dropbox was targeting in the funding round back in November, and far above the $4B valuation Dropbox secured in a 2011 funding round.

With Dropbox previously reported to be targeting 2013 sales of $200M+, the funding round might value the company at close to 50x trailing revenue. Dropbox had 2012 sales of $112M, and 2011 sales of $46M.

GSV Capital (GSVC) will be happy to hear the news. The tech investment fund estimated its Dropbox stake was worth $15.1M (5.9% of NAV) at the end of Q3. That figure should be ratcheted higher when GSV delivers its Q4 report.

The Dropbox report comes four days one stating mobile payments platform Square (believed to be mulling a 2014 IPO) has launched a tender offer (shares are being unloaded by early holders) at a $5B valuation.

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Comments (28)
  • Deja Vu
    , contributor
    Comments (1805) | Send Message
     
    So name of the game is to go public at jaw dropping valuations and get them included in the indexes as fast as possible so that every American is forced to buy these useless shares as the insiders unload them. See Facebook for example. Once the index funds are done it is going to drop like a rock. And every American will be poorer will Wall Street and Silicon valley laugh all the way to the bank.
    17 Jan 2014, 08:33 PM Reply Like
  • rambler1
    , contributor
    Comments (1000) | Send Message
     
    Yep the old pump & dump. Sounds like a sophisticated Stratton Oakmont.
    18 Jan 2014, 11:50 AM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (9690) | Send Message
     
    Or take advantage of the game and buy GSVC trading significantly below NAV.
    18 Jan 2014, 12:11 PM Reply Like
  • psychological-dividends
    , contributor
    Comments (820) | Send Message
     
    Well, I can assure you I won't drink the KoolAid.

     

    Indexes as objects of abuse by management and VCs, very interesting. In a sense, it sort of socializing equity and problems.
    18 Jan 2014, 12:26 PM Reply Like
  • ReligiousWacko
    , contributor
    Comments (1838) | Send Message
     
    Agree completely. That's why I got out of big ETFs...FB, AMZN, etc. all ripe for 50 if not 80+ percent drops. But 'boring' companies are mostly fairly valued imho
    18 Jan 2014, 05:35 PM Reply Like
  • AutoRegressive
    , contributor
    Comments (242) | Send Message
     
    I wish I could get into drop box at this valuation. I love the service.
    17 Jan 2014, 08:44 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (33930) | Send Message
     
    You'll have the chance to buy it much cheaper. After it IPOs at $12 billion and races to $20 billion.

     

    Then it will plunge to $2 billion, or 1/5 of what it's "worth" right now.
    18 Jan 2014, 09:17 AM Reply Like
  • wweirich
    , contributor
    Comments (217) | Send Message
     
    The tortoise usually wins. Slow and steady. Leave the jack-rabbits to the fast and furious crowd. Next!
    18 Jan 2014, 11:25 AM Reply Like
  • Mking30
    , contributor
    Comments (142) | Send Message
     
    DO U REALLY EXPECT THAT TO HAPPENED, i KNOW ILL DO MY OWN DD BUT racing to 20billion than dropping to one fifth seems like you have a crystal ball, do u have a crystal ball?
    19 Jan 2014, 12:55 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (33930) | Send Message
     
    You don't need a crystal ball - that happens in nearly every IPO bubble, they race forward then implode. The same thing will happen to TWTR, for instance. It too will implode at some point simply because the business cannot justify the price it trades at.
    19 Jan 2014, 06:51 AM Reply Like
  • ReligiousWacko
    , contributor
    Comments (1838) | Send Message
     
    Why do you think this valuation is attractive ? Because you love the service ?
    19 Jan 2014, 09:34 PM Reply Like
  • EquityInvestor1
    , contributor
    Comments (87) | Send Message
     
    This reminds my of the Dot.com fiasco all over again. Back then they said the same rubbish about future growth and valuations. Once again, it will eventually end badly.
    17 Jan 2014, 11:19 PM Reply Like
  • Bouchart
    , contributor
    Comments (1104) | Send Message
     
    Correct me if I'm wrong, but Dropbox is essentially a bunch of servers and hard drives that store data, right? Exactly how is this worth $10 billion when there's essentially no moat to this business?
    17 Jan 2014, 11:25 PM Reply Like
  • psychological-dividends
    , contributor
    Comments (820) | Send Message
     
    Um, it's not?
    18 Jan 2014, 01:10 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11174) | Send Message
     
    Didn't Prince write a song about times like these in IPO crazed, non-profitable tech land?

     

    I believe it focused on a particular date...
    17 Jan 2014, 11:28 PM Reply Like
  • psychological-dividends
    , contributor
    Comments (820) | Send Message
     
    We're going to party like its 2001!
    18 Jan 2014, 01:11 PM Reply Like
  • SoldHigh
    , contributor
    Comments (991) | Send Message
     
    $10 Billion valuation? LOL Oh, come on....
    17 Jan 2014, 11:30 PM Reply Like
  • Alan Longbon
    , contributor
    Comments (394) | Send Message
     
    Perhaps the valuation is based on revenues, or future revenues. Also the data centers sit on real estate that they hopefully own and not rent.

     

    This is not quite a dot com scenario as Dropbox actually offers a service and has revenues, the dot com valuations were often companies with none of those things.

     

    There is a lot of optimism out there at the moment as most people half forget the GFC and there is a fresh crop of workers now in their mid twenties who have no experience of the GFC let alone the dot com crash.

     

    Look for an interest led crash in 2018/19 and a land led crash in 2025/26, until and between those times things will be going up and looking good just like they do now.
    18 Jan 2014, 09:37 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (33930) | Send Message
     
    There were many companies offering valid services, showing revenues and even profits during the dotcom bubble. This is no different.
    18 Jan 2014, 10:21 AM Reply Like
  • Robin Hewitt
    , contributor
    Comments (5473) | Send Message
     
    Just to re-inforce Paulo's point, Amazon, eBay, Yahoo!, and Google were born in the dot-com era and Intel became a major company during that time. Cloud computing and the Internet of Things were both born at that time (Sun/java). These are just now becoming viable business models but they were started as part of dot-com.

     

    The bubble and bust was driven by two things -- fraud and me-too's with no intrinsitc value. Fraud was what ultimately burst the bubble, starting with Enron then WorldCom. Although stock prices collapsed the tech revolution itself was real and continued on.

     

    Companies like Facebook and Dropbox are similar to the me-too companies of the dot-com era. Zero technology moat, massively overinflated valuations. Eventually their shares will collapse to match their true valuations. Just as AOL's did during dot-com collapse.

     

    Intrinsic value companies in today's tech boom will be found in robotics, data analytics, and image analysis. Look in these areas for viable business models with a technology moat.
    18 Jan 2014, 12:24 PM Reply Like
  • InvestingWit
    , contributor
    Comments (81) | Send Message
     
    While I don't disagree with some of your conclusions, as tech is ever evolving it is not easy to see far in the future. Amiga's were the best machines in the 80s, yet the company didn't fare well. In my view, during the mid 80s it was impossible to tell which platform will dominate, at least impossible for me to tell anyhow.

     

    The platform that dominated the 80s computing revolution was the one that used the worst technology, watching a video of monkey island playing in Amiga and one in DOS is telling. The series of contracts with retailers, software and hardware companies that made DOS the dominant platform was impossible to predict beforehand. Business fundamentals, views on technology or anything, I don't think something would had worked, sometimes the future is just hard to predict.
    20 Jan 2014, 05:58 PM Reply Like
  • LYogi
    , contributor
    Comments (3115) | Send Message
     
    And BlackBerry is worth only 5 billion? Cmon
    18 Jan 2014, 09:59 AM Reply Like
  • Barry North
    , contributor
    Comments (299) | Send Message
     
    Buffett in 2012, " .... told Berkshire Hathaway shareholders that initial public offerings are almost always bad investments. He says there is so much hype involved that IPOs won't be the most-attractive value. He says investors should be looking for good businesses to buy and trying to determine how those companies will fare in 10 years"

     

    Absolutely. I really like Dropbox as a product, but be warned, IPOs are priced by experts to fleece the unsuspecting. Any IPO that is good value, very very rare, is usually taken up by institutions and the general public hardly get a look in. You know an IPO is a dud when your broker rings you to sell it. The institutions have said no.
    18 Jan 2014, 11:52 AM Reply Like
  • divinecomedy
    , contributor
    Comments (465) | Send Message
     
    Muppet Time!!! I am sure even the Wall St guys are shaking their heads i.e. how is it that people keep buying into these?
    18 Jan 2014, 01:41 PM Reply Like
  • Northwest Investor
    , contributor
    Comments (1459) | Send Message
     
    And for extra credit . . . these thing happen nearer to

     

    a) a top
    b) a bottom.

     

    time to put on your skeptical spectacles. . . Dropbox makes a very nice product. I use it. Its hardly special, unique or hard to replicate.
    19 Jan 2014, 02:50 AM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (13383) | Send Message
     
    Dropbox is trying to get funding before Box.com lol. Enough said about a moat. There are a ton of share/storage sites and making one isn't all that hard as long as you can find a way to afford to offer free storage for people on someone else's dime. For now that dime looks like investors and/or Google/Microsoft who want all your attention all the time so they can mine their customers to death.
    19 Jan 2014, 02:53 PM Reply Like
  • Ta0
    , contributor
    Comments (493) | Send Message
     
    I've been a Dropbox user since 2009 and have it installed on every single cell phone, computer, tablet, netbook, and laptop I own. I shared this service with all my friends and family because I found it to be very useful. I haven't paid anything to use their service because they gave it to me for free. The more people I hooked onto their service, the more storage space they gave me. I now have far more than I will ever need, but I've been known to fill up space on hard drives that I thought would have been 'far more than I would ever need'.

     

    I am not sure how they are going to be able to make any money, considering that their service is free, but I can see the value of their product. Since I like to at least consider the stocks of those products and services that I really like, I am hoping that they will do well but I don't think I will be rushing in to grab shares at the first ring of the bell.
    19 Jan 2014, 08:54 PM Reply Like
  • BornIn87
    , contributor
    Comments (111) | Send Message
     
    Facebook could put an end to dropbox at the drop of a hat. Stupid thing to invest in.
    19 Jan 2014, 09:47 PM Reply Like
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