DBX
Dropbox, Inc.
$30.54
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 46.4% below fair value
You pay
$30.54
Bear
$34.62
Fair
$56.96
Bull
$81.03
Bear
$34.62
+13.4%
8% stage 1 growth, 11% discount
Fair
$56.96
+86.5%
14% stage 1 growth, 11% discount
Bull
$81.03
+165.3%
18% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (14% base case)
Terminal Value % of EV
42%
Implied Market Multiple
15.1x
Market is pricing in (growth)
5.2%
vs 13.7% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $26.50 from 16 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $56.96 per share.
Warnings
Stock-based employee pay equals 59% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $26.50 (from 16 analysts). Our estimate is 153% above the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions