Dropbox (DBX) was up over 13 percent on Friday, with almost 8% of that coming in after hours. After Slack’s (WORK) buy out by Salesforce (CRM) , there has been increased chatter among investors and analysts on what the next tech M&A target could be. On the morning of Friday December 11th, theinformation.com wrote an article making a case that DropBox, Box & MongoDB could be acquisition targets. However, this article does not have any inside information and is merely one author’s opinion on which companies may in the future be target of M&A deals. While prior to official Slack deal, the WSJ published an article reporting of talks between Slack and Salesforce which propelled Slack’s stock higher, there is no public news on any specific talks between Dropbox, Microsoft or any other companies.
Dropbox is a 9.3 billion market cap company. With a price to sales ratio of 5.6. Dropbox revenue for the twelve trailing months ending September 30, 2020 was $1.856B, a 16.63% increase year-over-year. While the revenue has been growing consistently, it has not grown at especially remarkable rates. Still, it does not have currently have a premium evaluation and on a pullback may present on opportunity for investors to get into down the road.
The reasonable market cap makes a potential future acquisition feasible, especially in the growing workplace productivity space. However, there is no reason to believe that such a deal is imminent. Buying the stock after such a large run up, on no actual news or changes in it’s core business is dangerous and we are most likely going to see a correction in the price in the coming days. We think it’s best to stay out of this name for now.
This site references only our opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.