(Reuters) – Cloud storage firm Dropbox Inc [DBX.O] raised the price range for its initial public offering by $2 on Wednesday as investors bid strongly for the first big tech IPO this year ahead of final pricing expected on Thursday.
The company now expects the offering to be priced between $18 and $20 per share, up from its previous range of $16 to $18. bit.ly/2ubO2LU
The new price range suggests the San Francisco company, co-founded in 2007 by Andrew Houston and Arash Ferdowsi, will hit the public market valued at up to $7.85 billion and the IPO will raise up to $720 million.
“The initial file price range was quite conservative relative to the valuations placed on comparable firms, such as Box,” said Jay Ritter, an IPO expert and professor at the University of Florida.
Despite the bump in price, Dropbox’s valuation is still well below the $10 billion that it commanded in a 2014 private funding round.
Dropbox’s IPO is being closely watched by the investment world for signs of the strength of enthusiasm for tech unicorns – young companies valued at more than $1 billion.
The last big unicorn to come to the market was Snapchat owner Snap Inc (SNAP.N), whose shares have cratered since the much-touted IPO last March. The stock closed a dollar below their IPO price of $17 on Tuesday.
Dropbox’s IPO comes on the heels of an upsized offering by cyber security firm Zscaler Inc [ZS.O], and a strong debut would encourage other tech biggies looking to go public.
Music streaming service Spotify, valued at roughly $19 billion in the private markets, has also filed for a direct listing and will debut the NYSE on April 3.
A direct listing lets investors and employees sell shares without the company raising new capital or hiring a Wall Street bank or broker to underwrite the offering.
In contrast, Dropbox has hired the likes of JPMorgan and Goldman Sachs, among others, for its IPO.
The order book for the offering closes at midday on Wednesday and the pricing is expected on Thursday.
Sources told Reuters on Monday that the offering was oversubscribed.
The stock will start trading on the Nasdaq on Friday.
Reporting by Sweta Singh, additional reporting by Nikhil Subba in Bengaluru; Editing by Anil D’Silva and Saumyadeb Chakrabarty