Dropbox, Inc. (NASDAQ:DBX) Is Expected To Breakeven
Dropbox, Inc.'s (NASDAQ:DBX): Dropbox, Inc. provides a collaboration platform worldwide. On 31 December 2019, the US$8.1b market-cap posted a loss of -US$52.7m for its most recent financial year. Many investors are wondering the rate at which DBX will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for DBX’s growth and when analysts expect the company to become profitable.
See our latest analysis for Dropbox
Consensus from the 14 Software analysts is DBX is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$36m in 2021. DBX is therefore projected to breakeven around a couple of months from now! How fast will DBX have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 49% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, DBX may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of DBX’s upcoming projects, however, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before I wrap up, there’s one aspect worth mentioning. DBX currently has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high debt relative to its equity. DBX currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
This article is not intended to be a comprehensive analysis on DBX, so if you are interested in understanding the company at a deeper level, take a look at DBX’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further research:
Valuation: What is DBX worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether DBX is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Dropbox’s board and the CEO’s back ground.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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