So what gives? Buried in the details could be the pivotal clue. Moreover, management’s Q4 guidance exceeded expectations across the entire spectrum. Fundamentally, it doesn’t seem to follow logic.Ĭonfusing matters more is the company’s encouraging third-quarter earnings report, where DBX beat sales and profitability estimates. But in that same period, Dropbox stock declined over 5%. That should be positive for DBX because it raises the specter of longer, more restrictive mitigation protocols. 16, new daily Covid-19 infections jumped over 548%.
In fact, recent data indicates that the company has turned into a somewhat contradictory investment.įrom Sept. That made me skeptical.Īnd if you look at the historical chart, I was right to be skeptical. Instead, the calculated correlation was a weak, unconvincing relationship. Specifically, I wanted to see a strong correlation between the DBX price and new daily novel coronavirus cases. However, I was still cautious on the stock because the math didn’t quite add up. At the time of my last article, shares had crossed above the $20 mark. As Covid-19 became part of our everyday reality, though, shares began pushing a resistance ceiling of $24. Right before the pandemic melted the market, DBX was trading above $19. In my previous write-up, I mentioned that Dropbox stock had come full circle. But for some strange reason, it’s not making sense on the technical front. As Moadel puts it, “Given the world’s irreversible trend towards distributed work and collaboration, the reward-to-risk balance of Dropbox stock becomes increasingly favorable.”įundamentally, this narrative makes perfect sense for DBX. Collectively, our nation rolled up its sleeves and got to work - remotely.Īnd that - as InvestorPlace colleague David Moadel suggests - brought the upside catalyst pointing favorable at DBX. In large part, this was thanks to good old-fashioned American resourcefulness. Of course, though, the market soon bounced back up from the March doldrums, sending many companies on an upward trajectory. And for a brief moment, I was right to be cautious. Therefore, investors would likely shift from a risk-on sentiment to risk-off. The world was facing an unprecedented health threat. As such, I believed it didn’t matter that Dropbox was relevant to the next-generation workplace. Nevertheless, Covid-19 represented a once-in-a-century disruption.
In that sense, the company is similar to Adobe (NASDAQ: ADBE) or Microsoft (NASDAQ: MSFT) - all three platforms allow people to work from just about anywhere. Yes, DBX represented an important solution for gig workers. In February, I argued for investors to be cautious against Dropbox stock. Before we get into it, let’s back up for a moment.
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