NEW YORK, Nov. 04, 2019 (GLOBE NEWSWIRE) -- Pomerantz LLP announces that a class action lawsuit has been filed against Dropbox, Inc. (“Dropbox” or the “Company”) (NASDAQ: DBX) and certain of its officers. The class action, filed in United States District Court, for the Northern District of California, and indexed under 19-cv-06348, is on behalf of a class consisting of all persons and entities other than Defendants who purchased or otherwise acquired Dropbox Class A common stock pursuant or traceable to the Registration Statement issued in connection with the Company’s March 23, 2018 initial public offering (the “IPO”). This action asserts claims under the Securities Act of 1933 (“Securities Act”) against Dropbox, the Company’s senior executive officers and directors, and venture capital sponsors of the IPO.
If you are a shareholder who purchased Dropbox Class A common stock pursuant or traceable to the Registration Statement issued in connection with the Company’s March 23, 2018 IPO, you have until December 3, 2019, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
[Click here for information about joining the class action]
Dropbox, Inc. provides a collaboration platform worldwide. Its platform allows individuals, teams, and organizations to collaborate and sign up for free through its Website or app, as well as upgrade to a paid subscription plan for premium features.
On February 23, 2018, Dropbox filed a registration statement for the IPO on Form S-1, which, after several amendments, was declared effective on March 22, 2018 (the “Registration Statement”). On March 23, 2018, Dropbox filed the prospectus for the IPO on Form 424B4, which incorporated and formed part of the Registration Statement. By way of the Registration Statement, Defendants offered and sold 41.4 million Class A shares at $21 per share for over $869 million in gross offering proceeds, which included the full exercise of underwriters’ over-allotment option to sell an additional 5.4 million shares. In addition, the Company conducted a private offering of Class A stock concurrently with the IPO in which it sold over 4.7 million shares to an institutional investor for an additional $100 million in gross proceeds. Numerous Company insiders, including certain of the Individual Defendants, also sold stock in the IPO, raking in more than $184 million after applicable underwriting discounts. Underwriters received more than $38.6 million in underwriting discounts and fees from the IPO proceeds, and several, including lead underwriters Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, received tens of millions of dollars more as a result of payments by Dropbox towards a revolving credit facility maintained by these investment banks.
The complaint alleges that the Registration Statement was negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and was not prepared in accordance with the rules and regulations governing its preparation. Specifically, the Registration Statement claimed that a significant proportion of the Company’s registered user base was primed for monetization. It claimed that 300 million of the Company’s 500 million registered users had unique characteristics making them likely to be monetized over time, purportedly presenting a “significant opportunity to increase [the Company’s] revenues.”
The Registration Statement also described Dropbox’s business model as involving the “[i]ncrease conversion of registered users to [the Company’s] paid subscription plans.” It highlighted the Company’s increase of paid users from 6.5 million users in 2015 to 11 million users by 2017, representing 69% growth over two years.
In connection with its second quarter 2019 earnings report, Dropbox still claimed to have “more than 500 million registered users” as of June 2019, indicating that the Company had experienced essentially no significant registered user growth since December 31, 2017 — months prior to the IPO. The Company had only converted an additional 2.6 million paid users in the year-and-a-half since the IPO, representing an annualized post-IPO growth rate of only 15% and less than 1% of the “300 million” figure provided in the Registration Statement. Similarly, the Company’s revenue growth rate had dramatically decelerated to only 18% for 2019, a sharp decline from the 40% and 31% annual growth rates highlighted in the Registration Statement.
On August 27, 2019, Dropbox stock closed at $17.53 per share, representing a decline of more than 16% from the IPO price.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com
CONTACT:
Robert S. Willoughby
Pomerantz LLP
rswilloughby@pomlaw.com