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DBX - Embedded Expectations Analysis - 2022 05 03

Dropbox, Inc. (DBX) currently trades below corporate and historical averages relative to Uniform earnings, with a 16.0x Uniform P/E (Fwd. V/E').

At these levels, markets are pricing in expectations for Uniform ROA to compress to 14%, accompanied by 7% Uniform asset growth.

Meanwhile, analysts expect Uniform ROA to fade to 23% in 2023, accompanied by 13% Uniform asset growth.

If sustained going forward, these levels would imply a stock price closer to $52, representing significant potential equity upside for the firm.

Moreover, the firm's most recent earnings call suggests management may have concerns about content sharing, pricing and packaging, and growth opportunities.
Dropbox Inc. Class A

Dropbox is a global collaboration platform that centralizes the flow of information between the products and services its users prefer. Dropbox allows individuals, teams, and organizations to collaborate. Anyone can sign up for free via the company's website or app, and upgrade to a paid subscription plan for additional features. Dropbox is a digital workspace where individuals and teams can create content, access it from anywhere, and share it with collaborators. The company also utilizes Amazon Web Services (AWS), for the remainder of its users' storage needs and to help deliver its services. These AWS datacenters are in the United States and Europe, which allows the company to localize where content is stored.

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In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
  • Stock analyst recommendations are not grounded in disciplined financial analysis
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  • Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available

We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.

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The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.

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