My Bullish Thesis

Prediction

I believe that Dropbox ("DBX") will be worth $60 per share by 2022. Here's why:

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Who is DBX?

Dropbox is a file storage and sharing service with plans to expand into creating the world's first smart workspace. The app helps workplaces collaborate by centralizing content and facilitating easy access across devices.

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CEO (Drew Houston)

Houston is a highly experienced and capable CEO as well as a 25% owner of the company. He co-founded DBX with his business partner in 2007. In February of 2020 Houston replaced Netflix CEO Reed Hastings on Facebooks board of directors.

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Business Plan

File Storage and Sharing - While this is not the most exciting industry to be involved in this business is sticky. The more files that are saved in DBX's servers the larger of a hassle it becomes to transfer them all. Additionally, this is a "ratchet" type business meaning that people's file storage needs usually trend in one direction... up! The more file storage you need the more DBX charges to store your files.

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Large - Dropbox has been one of the largest file storage and sharing services since its inception in 2007. As of Q3 2019,  DBX has over 600 million users (14.3 million paid users) and 400 billion pieces of content uploaded.

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Dropbox Spaces - Dropbox spaces is a "virtual workspace" that is meant to assist businesses coordinate projects and work together. Dropbox spaces is meant to have everything a remote office needs to work. File storage, communication, collaboration, organization, tasks, meetings, and updates.

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(Currently Dropbox Spaces is in closed beta but the company has announced that the product should be available in Spring of 2021)

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Dropbox Paper - This feature of DBX allows you to create and collaboratively edit documents within the app eliminating the need to create documents outside of the app before transferring them in.

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Easy to Use - Dropbox is one of the easiest apps to download across devices and once downloaded it is easy to drag and drop files into the app. Files are immediately able to be viewed across devices.

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(The author of this thesis has found that DBX outperforms both icloud and Microsoft's "Onedrive" in this area)

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Hellosign - Dropbox is competing against Adobe ($476.87) and Docusign ($222.59) meanwhile DBX ($21.24). This function is Docusign's entire business. Docusign has a market cap of $41.53 B while DBX has a market cap of $8.79 B.

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The Bear Thesis

Competition - DBX competes against some of the largest companies in the world in the cloud file storage service. Competition includes Amazon, Microsoft, Apple, Slack, and "Box". The list of competitors is extensive and each of DBX's competitors is formidable.

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Slowing Revenue Growth - The key word in this point is growth. DBX has steadily been growing its revenues but has seen that growth decline in its most recent quarters. This doesn't appear to be that big of a deal because DBX is still consistently beating its earnings per share targets.

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Past Performance - DBX IPO'd at $29 per share on March 23, 2018. Despite hitting the $39 mark just 3 months later the company has steadily declined since its IPO. Concerningly, this trend has taken place amidst the COVID-19 pandemic which should have strengthened DBX's business and despite the fact that DBX has consistently grown its revenues since its IPO.