I think it is difficult to make a straight-faced argument that Dropbox can maintain that level of market share with a more expensive and less integrated product. 20% of iCloud customers were paying users in 2018, the last time Apple shared that stat. Combining human expertise with NLP/ML/AI technologies (feat. No other competitors claimed more than 4% of the field. Meanwhile, Box (BOX), a direct competitor, had ~13 million paying users out of just 71 million registered users, or 18%, as of 2Q20. 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 A newer version of this report is available: Cloud Storage Report 2017 CloudRail, a leader in API integration management solutions for app developers, released a new report analyzing … Despite facing larger and more entrenched competition, Dropbox is priced as if it will quickly improve profitability while also increasing its average paying users to equal 30% of Amazon’s Prime members. Access and share your photos, docs, and more from anywhere for free. If I assume more realistic revenue and profit growth, DBX has significant downside. Memory clean, files safe, Get 1TB Cloud Storage for FREE. It’s about sharing them, as well. Most of Dropbox’s competition is more profitable too. © 2020 Forbes Media LLC. Top Competitors Websites The paper empirically shows that my firm’s data is superior to “Operating Income After Depreciation” and “Income Before Special Items” from Compustat, owned by S&P Global (SPGI). See our client testimonials. Figure 4: Dropbox & Competitors’ Cloud-Based Storage Plans, Most of Dropbox’s Peers Are More Profitable Too. Decline of Dropbox . 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%. Entrenched competition is well-positioned to take more market share, but the stock is priced for just the opposite. For those who don’t need a lot of storage, Dropbox Basic is a free plan with 2 GB of storage. Fiduciaries should avoid this week’s Danger Zone pick: Dropbox Inc. (DBX). While this stock has outperformed as a short, it could fall much further. 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. While many cloud storage systems focus on collaborating on smaller files, Dropbox makes it easy for businesses to share large documents, or video files that might not be shareable on other cloud storage systems. Figure 10: Dropbox’s Implied 2027 Average Paying Users vs. MEGA is Cloud Storage with Powerful Always-On Privacy. Even in the most optimistic of scenarios, Dropbox is worth less than its current share price. Dropbox cloud storage offers a range of plans that uniquely meet personal, small and large business plan needs – from 2 TB to unlimited space. It is also worth noting that the revenue growth expectations embedded in the current valuation of DBX are meaningfully higher than consensus analyst expectations of 14% in 2020, which drop to 10% in 2022. Dropbox, Inc. Figure 7 shows that while the firm’s reported FCF is trending up, Dropbox’s true FCF is moving in the opposite direction. For instance, Apple offers all of its customers 5 GB of free space through iCloud. As investors focus more on fundamental research, research automation technology is needed to analyze all the critical financial details in financial filings as shown in the Harvard Business School and MIT Sloan paper, “Core Earnings: New Data and Evidence”. Cash bonuses were awarded in 2019 based on executives’ individual performance and the firm’s performance relative to its target revenue. Dropbox lets anyone upload and transfer files to the cloud, and share them with anyone. Its 600 million users must account for a good chunk of the world’s knowledge workers, and now Dropbox is … I optimistically assume that Salesforce can grow Dropbox’s revenue and NOPAT without spending any working capital or fixed assets beyond the original purchase price. And with advanced sharing features, it’s easy to share docs and send files—large or small—to family, friends, and co-workers. The report also revealed that cloud storage is overwhelmingly dominated by music, with about 90 percent of Apple, Amazon and Google cloud users storing music in the cloud. He is author of the Chapter “Modern Tools for Valuation” in The Valuation Handbook (Wiley Finance 2010). 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. Elite money managers, advisors and institutions have relied on us to lower risk and improve performance since 2004. By comparison, Google Cloud’s revenue increased 43% YoY in 2Q20, and Microsoft grew its commercial cloud revenue by 39% YoY over the same period. , file synchronization, personal cloud, and share your photos & Automatically... Dropbox Inc. ( DBX ) is a collaborative workspace that helps teams create share!, Get 1TB cloud storage, file synchronization, personal cloud, the... 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