Dropbox Inc. (NASDAQ:DBX) released its first earnings result since its IPO, and the company did very well on all fronts.
Revenue of $316 million came in ahead of the $309 million in sales that analysts were expecting for the online storage company. Dropbox also recorded adjusted earnings per share of $0.08 this past quarter, which was also higher than the $0.05 that was expected.
In addition to a strong quarter, the company also announced a higher-than-expected guidance, with sales expected to range between $1.34 billion to $1.35 billion for the full year, which is also above the $1.33 billion that analysts expected for 2018.
With so much good news in its first earnings report, you would expect Dropbox’s share price to see some bullish activity. However, in after-hours trading the stock was down over 5%.
This underscores the risk that’s involved with IPOs and how volatile they can be. Even though the company posted a strong quarter, because the share price has already risen more than 12% since first listing on the NASDAQ back in March, a lot of bullishness may have already been priced into the stock.
Investors may have been hoping for more of an earnings beat or a stronger guidance. Unfortunately, sometimes the markets can be irrational and even a strong earnings report is sometimes not enough to generate much momentum.
However, over the long term Dropbox has a lot of potential given the importance users are placing on security and data privacy. It may be highly valued given its lack of earnings, but Dropbox’s business model provides it with a lot of avenues to grow and its solid reputation in the industry gives it a big advantage over its peers.
