Dropbox Shares Jump Over 35 Percent, Ending Drought in the U.S. IPO Market

The price of Dropbox shares surged over 35 percent on Friday, the first day of trading for the stock on the exchange, as investors, despite a sharp decline in U.S. markets, showed significant interest in the first major initial public offering (IPO) of a technology company in over a year.

After the price of Dropbox shares was set at $21 in the initial public offering (IPO) on Thursday, in the first hours of trading on the Nasdaq market, the stock jumped over 50 percent to $31.60 on Friday, but ended trading at $28.40.

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The 35 percent jump in Dropbox’s debut on the market is particularly notable given that on Wall Street on Friday, the S&P 500 index fell 2.1 percent, while the Nasdaq index lost 2.4 percent as markets have been under pressure for days due to the risks of a trade war between the U.S. and China.

At the initial share price, Dropbox had a market value of $12.67 billion, significantly above the $10 billion valuation it had in its last round of private funding.

Dropbox’s long-awaited debut ended a lengthy drought in the U.S. IPO market for major tech names. The last major public offering of tech company shares was Snap’s offering in March of last year.

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– In the case of Dropbox, investors have the opportunity to invest in a new generation of technology companies with a proven business model, says Tom Taulli, an analyst at InvestorPlace.com.

The San Francisco-based company, which started as a free service for sharing and storing photos, music, and other large files, competes with Alphabet’s Google, Microsoft, Amazon.com…

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Indeed, Dropbox is not yet profitable, but this is common for startup companies that invest heavily in growth. As a publicly traded company, Dropbox will be under pressure to quickly cover its losses in the future.

This 11-year-old company recorded revenue of $1.11 billion last year, while the year before it had revenue of $845 million. Its loss nearly halved last year from about $200 million in 2016.