Dropbox Shares Leap in I.P.O., and Silicon Valley Smiles
Dropbox, the file-sharing company and Silicon Valley darling, had a strong market debut Friday, a reassuring sign for the technology industry and for the investors who have billions locked up in other highly valued but privately held start-ups.
Shares of San Francisco-based Dropbox soared above $30 shortly after trading in the stock opened Friday morning. That was 45 percent higher than the $21-per-share price at which the company sold 36 million shares on Thursday night. The initial public offering valued Dropbox at $9.2 billion.
[...] Founded in 2007 by two Massachusetts Institute of Technology computer science students, Drew Houston and Arash Ferdowsi, Dropbox has never turned an annual profit, despite strong sales growth.
Also at Bloomberg, TechCrunch, and CNBC.
(Score: 5, Insightful) by looorg on Monday March 26 2018, @02:19PM (16 children)
I guess this just shows how fucked up the entire stockmarket or corporate gambling scene really is. A company that has never, and will never, make a profit is worth over $11 billion ... I don't recall the number for Spotify, since it was another recent example, but it was also some ridiculous amount for a service that just plays music for you. As noted I get the impression that the entire stockmarket has just failed us all and turned into speculative gambling and not actually for what it was intended.
(Score: 3, Insightful) by idiot_king on Monday March 26 2018, @02:27PM (13 children)
Correct. Marx and Engles predicted this exact phenomenon over 150 years ago, and we still haven't learned the lesson they've tried to teach us.
The "free market" just chains people to unrealistic expectations. That's why you get boom-and-bust cycles. People unfortunately are not efficient at knowing what to value when because they always overvalue what really doesn't inherently have value in the true sense of utility. Thus you get speculation raised to the power of speculation instead of someone to put the brakes on and prevent these collapses from happening.
Unfortunately I'm not sure we will ever learn their now very old wisdom.
(Score: -1, Troll) by Anonymous Coward on Monday March 26 2018, @02:48PM (3 children)
Oh no, people having freedom to spend money, in a badwrong way, especially bad investments!
(Score: 0) by Anonymous Coward on Monday March 26 2018, @04:41PM (2 children)
Ha, Ha! Exactly!
Why do people think that the stock market should always only rise (and that only the long side of a trade should be successful)? If it only rose, there would be no sellers. Likewise, if it only sunk, there would be no buyers.
Either way (with nobody buying nor selling), the market would be flat.
Folks, there has to be ups and downs in the markets (including crashes), otherwise, there is no reason to invest!
(Score: 1) by khallow on Monday March 26 2018, @05:01PM
Even if that were true, there's always somewhere else to put money, like retirement expenses or a house.
And a good portion of the shuffling is because people have differing opinions of the relative value of stocks and other investments. Selling one stock and buying a second with the proceeds is a very common move.
(Score: 2, Interesting) by Anonymous Coward on Monday March 26 2018, @05:30PM
Even if it always rose, eventually there would be sellers who want to turn the stock into cash to buy something.
Even if it always sunk, as long as it doesn't sink as fast as other investments, there would be buyers who want a slower rate of decay.
(Score: 1, Interesting) by Anonymous Coward on Monday March 26 2018, @06:43PM (5 children)
Tax policy, regulation, gatekeeping, central banking. Not exactly the "Free" Market, eh?
The government taxes dividends more than capital gains; so, ownership no longer means anything, and people just try to sell to the greater fool.
You can use them to offset your capital gains taxes; government makes losses a good thing, and government socializes the losses.
By law, only an "Accredited" Investor (i.e., someone who is already rich) can buy the securities of a startup that isn't yet in SEC's draconian system; the rich, therefore, are the ones who get richer on the Next Big Thing.
Whence came all this bad money chasing up the stock market? It was printed by the Fed, sent out to the old, rotting institutions during the Housing Crisis (also caused by Fed policy and Congressional law), and now is coming back to cause a share market bubble.
As always, everything you hate can be traced back to Government. Always and Everything.
Freedom is always the answer, not the problem.
(Score: 2) by dry on Tuesday March 27 2018, @12:32AM (4 children)
Yet, some of the shittier places to live have minimal government. Places with unrestricted markets such as parts of Mexico where the business people are free to behead you if they don't like what you have to say. Places like Syria or Yemen where there is minimal government and people are free to kill you.
The problem isn't government, the problem is corrupt government. In democracies, the market leads to corruption, with politicians for sale. In other systems with lots of poor, they have revolutions that promise to spread the wealth around, run by corrupt people who are only interested in spreading the wealth to themselves.
(Score: 0) by Anonymous Coward on Tuesday March 27 2018, @03:15AM (3 children)
Capitalism (which implies anarchy) does not imply a lack of order—quite the contrary in fact.
You can have either rulers or rules, but not both.
(Score: 2) by dry on Tuesday March 27 2018, @04:52AM (2 children)
Capitalism rewards the most efficient and it is more efficient to change the rules to favour one self then to compete with a better product.
(Score: 0) by Anonymous Coward on Wednesday March 28 2018, @07:05PM (1 child)
Clearly, the Soviet Union did not follow Capitalism; clearly, you don't understand Capitalism.
(Score: 2) by realDonaldTrump on Friday April 06 2018, @10:29AM
Let me tell you, I went to Moscow in 1987. I met so many Politburo guys. One thing led to another, and we got to talking about building a large luxury hotel across the street from the Kremlin. And President Gorbachev said he'd meet me in Manhattan. That he'd bring Raisa and we'd have a very nice dinner. But he didn't show up. Woody Allen says 80% of success is showing up. That is so true. And that's why Gorbachev FAILED very badly!
(Score: 4, Interesting) by arcz on Monday March 26 2018, @06:51PM (2 children)
11 billion... yeah nope not happening. It's greater fool theory... I'll stick to bitcoin.
Dropbox cannot be worth that much because with around $20,000 I could buy/rent all the infrastructure I need to provide the exact same service and could program something similar in a couple of weeks as far as the software side goes.
11 billion is nonsense, if dropbox raises prices, people will start a competitor because it's easy to do so. Then dropbox will be forced to charge the cost of service... which is basically nothing when you divide it amoung the huge number of users you'd have.
(Score: 2, Insightful) by Anonymous Coward on Monday March 26 2018, @07:00PM (1 child)
What matters is the Network Effect.
The proles are slow to take up any particular technology, so people end up having to work within the framework of existing solutions.
Well, a lot of proles are using Dropbox.
(Score: 2) by arcz on Thursday March 29 2018, @04:27PM
(Score: 2, Interesting) by Anonymous Coward on Monday March 26 2018, @02:33PM
It was intended for something exactly like this: exchange shares of control for money. Although people have been willing to get no control for big bucks in these bubbles, just the hope of unloading them on a sap willing to pay more.
I wouldn't mind so much, but if they stay highly valued, my index funds will have to buy these shares.
(Score: 1) by khallow on Monday March 26 2018, @04:43PM
Or how irrelevant. I think the AC replier [soylentnews.org] had a good point. The exit strategy is that this business gets blobbed with more such businesses with stratospheric valuations. That's why it's so high now.
My take is that as long as they're buying overvalued stock with overvalued stock, there isn't anything particular bad going on. It's all fantasy money chasing its tail with little consequence. Just don't be a sucker putting real money into this thing.
(Score: 2) by bradley13 on Monday March 26 2018, @02:54PM (3 children)
Look for the companies that turn a solid profit, year after year. Look at their stock valuations. These are usually non-sexy companies, like maybe your local garbage collection service, and they may well trade at a P/E ratio of 10 or less.
Then you see the tech bubble: Stocks selling for crazy amounts, while the companies make very little profit (or none at all). But once the companies reach a certain size, somehow they almost never fail. Instead, they are bought up by the next generation of tech companies with crazy valuations.
It's a strange world...
Everyone is somebody else's weirdo.
(Score: 5, Interesting) by MichaelDavidCrawford on Monday March 26 2018, @03:12PM (2 children)
That's what John Scully said to an all-hands meeting at Live Picture.
Having grown bored with rocketing Apple Computer into a smoking radioactive crater, he came to Live Picture to do the same to... wait for it... a... TOOLS COMPANY!
Live Picture's product, also called Live Picture was a way cool graphic editor. But all Scully could think about was that The Street wouldn't value us because we made tools.
So he acquired some other company that made a competitor to QuickTime VR, and had the idea that Our Internet Strategy could consist of little other than a platform for marketing studies in which human test subjects could use their mice to virtually pick up and rotate all around proposed product packages but.... wait for it....
THEY WOULD DO SO OVER THE INTERNET!
He hired a really rude CEO to take us public. Really companies like Live Picture should always be privately held. We did just fine as a private company.
LP did a reverse 7-to-1 stock split, the IPO was cancelled, Kate Mitchell fell on her sword then LP declared bankrupcy.
I have to say though, my stock certificate - and yes I had money to burn so I exercised my options - sure looks cool. It's printed the way money is but on a much larger sheet of paper.
The bankruptcy was bought out by I think MGI, then MGI's bankruptcy was bought out by Roxio.
That was some really cool code in that graphic editor.
"was"
Yes I Have No Bananas. [gofundme.com]
(Score: 3, Funny) by khallow on Monday March 26 2018, @04:53PM (1 child)
(Score: 0) by Anonymous Coward on Tuesday March 27 2018, @04:16AM
of a bunch of the people he's no doubt be responsible in helping get fired or laid off during downsizing events and you might not have to run back to your room for that pillow :)
If only we could do that with more executive types.
(Score: 3, Funny) by fritsd on Monday March 26 2018, @04:37PM (6 children)
I just wanted to say thanks to the Soylentnews editors (or maybe the submitter) for including a link to the Dropbox Wikipedia article.
Because I didn't really know what Dropbox does or is.
(Score: 0) by Anonymous Coward on Monday March 26 2018, @05:35PM (3 children)
It is popular in the US for some reason to share photos or whatever. Kind of like FreeDrive back in the 2000 bubble. Haven't seen many pirate links point to Dropbox though.
It's not like they don't have competitors either; Box IPOd in 2015 and was valued at $1.6b.
(Score: 1, Informative) by Anonymous Coward on Monday March 26 2018, @05:41PM (2 children)
You don't detect sarcasm very well, do you?
(Score: 0) by Anonymous Coward on Monday March 26 2018, @08:58PM
(Score: 1) by fritsd on Tuesday March 27 2018, @03:41PM
Um, actually, I wasn't being sarcastic for a change; I really had no idea about Dropbox.
(Score: 2) by bob_super on Monday March 26 2018, @06:29PM (1 child)
Since the topic was IPO, the link should have been to the stock ticker, as is customary for Serious Papers. Those people who genuinely don't know the company, get to decide if they like the stock variation over the last 30 minutes, before they actually waste time figuring out what the company allegedly does.
(Score: 2) by mmcmonster on Monday March 26 2018, @09:23PM
If you're a serious investor you either already know the ticker, or should just put your money in a low expense ratio Total Stock Market index fund such as VTSAX or similar.
The gambler goes for the ticker. The one who wants the sure thing (in the long run) goes for VTSAX.
(Score: 2) by All Your Lawn Are Belong To Us on Monday March 26 2018, @10:41PM
... Will they turn a profit, eventually? More important: Will they stay viable and will the amount laid down for them be worth more tomorrow?
That they haven't turned a profit yet is not terribly relevant to the investor. Ask Jeff Bezos. 20 years ago Amazon was an IPO that wasn't profitable at the time and Bezos didn't seem to have any plans to make it profitable in the immediate future. There are some that say it still isn't [seekingalpha.com]. Forbes (which I don't go to but read the Google summary) has a similar position - they haven't posted all that many profitable quarters given their existence. Yet they IPO'd at $18 and are close to $1,100 now and I don't think anybody believes they are going anywhere soon.
This sig for rent.