What Happened?

Shares of cloud storage and e-signature company Dropbox (Nasdaq: DBX) fell 15.8% in the afternoon session after the company delivered disappointing fourth-quarter 2024 results as customer growth slowed to a crawl. Paying users remained roughly flat year on year but declined sequentially. Revenue edged up slightly from the prior year, with pricing adjustments and foreign currency fluctuations contributing to the sluggish growth. Margins were a mixed bag. While GAAP gross margin saw a slight uptick, operating margin plunged to 13.7% from 42.1% a year ago, largely due to workforce reduction expenses and the absence of a one-time real estate gain that had boosted the prior year's results. Overall, this was a weak quarter, with sluggish customer growth.

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What The Market Is Telling Us

Dropbox’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. Moves this big are rare for Dropbox and indicate this news significantly impacted the market’s perception of the business.

Dropbox is down 8.8% since the beginning of the year, and at $26.97 per share, it is trading 19% below its 52-week high of $33.27 from February 2025. Investors who bought $1,000 worth of Dropbox’s shares 5 years ago would now be looking at an investment worth $1,201.

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