After an IPO just last year, Dropbox Inc (DBX) and Spotify Technology (SPOT) already seem to have hit a bit of a snag. They’ve been overshadowed by various new IPOs like Zoom Video, PagerDuty, etc. These new April ’19 entrants have seen the better side of the market. Zoom stock price and PagerDuty stock price have risen by 41% and 29 % respectively over the very short period.
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The same however cannot be said for either Spotify (flat since its IPO) or Dropbox, whose stock price fell by 15% over the same period. This year has been a little better, with Spotify increasing 27% year to date, and Dropbox up by 17%.
Dropbox Stock Price
With a very slow to almost no revenue growth, Dropbox created a sense of insecurity among the investors. The company had announced earnings much higher than those forecasted over the span of the previous five quarters. In spite of this, it has been unable to increase sales of the company by even a percent during the same period.
Moreover, the growth rate is also beginning to slow down with a projected current year’s growth rate at 18%. This is as compared to last year’s 26%. Meanwhile, sales projected figures indicate a rise by a mere 15%. These figures indicated the company’s vulnerable position in the market.
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In hopes of recovery, the company, on June 11, announced an ‘integrated workspace’. It’s a user interface aimed to hook into document repositories along with connecting to various other enterprise apps, like Slack. Slack is a collaboration tool product of a newly-went public start-up also named Slack. Being far behind in revenue as compared to Dropbox ($600 million for slack while $1.6 billion for Dropbox), Slack still poses a threat to the latter. Forecasts show that Slack’s revenue growth would be over 50%. With the load of new IPOs in the market, Dropbox has to fight much harder.
Dropbox did familiarize the market with the sharing of files. But it somehow remains less famous than Slack, now the go-to app for employees. This does imply the inefficiency of customer relationship management. Additionally, being unable to keep a track record of the new customers, and among the old ones that the company retained and lost. The company is quite behind in its progress based on the retention metrics Wall Street loves to use when dealing with enterprise software.
Spotify Stock Price
Spotify, on the other hand, has a little different story. It has an increasing growth rate of revenue from 20% last year to 27% this year. This rounds out the revenue to $7.7 billion. The Spotify stock price appears low, making the revenue 3.5 times of the stock value. EBITDA of the company has been negative, though, now, the negative figures are decreasing. This could indicate a profit for the firm in 2021. The customer base has been increasing for Spotify. But user count at March-end was up by 26% from the previous year’s figure.
The next year’s report would be out by August 8th for Dropbox and on July 25th for Spotify. It is crucial for both the companies to keep its investors, luring in more at the same time.
