DBX - Dropbox: Time To Take Caution (Rating Downgrade)

2024-02-18 20:04:26 ET

Summary

• Dropbox stock dropped more than 20% after Q4 results, a result of the company's slowing top-line growth and heightened churn.
• The company also pulled back on its long-term FCF target for FY24, which formed the basis for its valuation for many investors.
• Its AI product, Dropbox Dash, is not generating significant acceleration in revenue, and its bundled offerings are showing weaker traction.
• Though still cheap at <10x FY24 FCF, Dropbox will have a long road to recovery ahead.

When the stock market is priced this high, execution has to be near perfect in order for rallies to keep continuing - and in the case of Dropbox ( DBX ), the file storage and sharing company's journey over the past year has been anything but perfect....

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