Dropbox Drops a Strong Opening Quarter in Line with Expectations; FVE $26; Shares Undervalued

We are lowering our fair value estimate for no-moat Dropbox to $26 from $30 per share as a result of slightly reduced topline growth projections. The firm’s second quarter financial results were largely in line with our expectations as upselling activity bolstered the firm’s topline. We continue to think that the market has been overly punitive on SaaS companies in recent months, including Dropbox. With shares trading around $22, we still see modest upside for long-term investors after the market selloff.