Investors Purchase Large Volume of Dropbox Put Options (NASDAQ:DBX)

Key Points

• Unusually high put-option activity: Investors purchased 3,282 Dropbox put options, about 48% above the typical daily volume of 2,217, signaling increased downside hedging or bearish positioning.
• Shares rose modestly while fundamentals were mixed: DBX gained 0.6% to $34.48, despite trading below average volume. Dropbox slightly beat quarterly earnings and revenue expectations, with revenue up 0.9% year over year.
• Analyst sentiment remains cautious: Dropbox has a consensus “Reduce” rating and an average price target of $28.25, well below the reported share price; insiders also sold more than $1.2 million of stock during the last quarter.

Dropbox, Inc. (NASDAQ:DBX - Get Free Report) was the recipient of unusually large options trading activity on Wednesday. Stock investors bought 3,282 put options on the company. This is an increase of approximately 48% compared to the typical daily volume of 2,217 put options.

Dropbox Stock Up 0.6%

Shares of DBX traded up $0.22 during trading hours on Wednesday, hitting $34.48. The company had a trading volume of 905,722 shares, compared to its average volume of 3,945,647. The firm has a market cap of $7.78 billion, a P/E ratio of 19.16, a P/E/G ratio of 5.20 and a beta of 0.64. The stock's 50 day moving average price is $31.62 and its 200 day moving average price is $27.55. Dropbox has a 52-week low of $21.69 and a 52-week high of $36.37.

Dropbox (NASDAQ:DBX - Get Free Report) last issued its earnings results on Thursday, August 6th. The company reported $0.75 earnings per share for the quarter, beating the consensus estimate of $0.74 by $0.01. The company had revenue of $631.50 million during the quarter, compared to analysts' expectations of $626.69 million. Dropbox had a negative return on equity of 24.26% and a net margin of 17.49%.Dropbox's quarterly revenue was up .9% compared to the same quarter last year. During the same period in the prior year, the business posted $0.71 EPS. On average, research analysts expect that Dropbox will post 1.93 EPS for the current fiscal year.

Insider Activity at Dropbox

In related news, CAO Sarah Elizabeth Schubach sold 1,632 shares of the company's stock in a transaction on Friday, July 31st. The shares were sold at an average price of $31.61, for a total value of $51,587.52. Following the completion of the transaction, the chief accounting officer directly owned 124,266 shares in the company, valued at approximately $3,928,048.26. The trade was a 1.30% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Karen Peacock sold 2,000 shares of the stock in a transaction on Wednesday, July 29th. The shares were sold at an average price of $33.00, for a total value of $66,000.00. Following the completion of the transaction, the director directly owned 22,366 shares in the company, valued at approximately $738,078. This represents a 8.21% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 37,036 shares of company stock worth $1,227,974 over the last quarter. 35.48% of the stock is currently owned by corporate insiders.

Institutional Inflows and Outflows

Several hedge funds have recently made changes to their positions in DBX. Empowered Funds LLC grew its holdings in Dropbox by 7.3% in the 1st quarter. Empowered Funds LLC now owns 38,795 shares of the company's stock worth $1,036,000 after acquiring an additional 2,655 shares during the last quarter. Cetera Investment Advisers raised its stake in shares of Dropbox by 10.8% during the second quarter. Cetera Investment Advisers now owns 24,623 shares of the company's stock valued at $704,000 after acquiring an additional 2,405 shares during the last quarter. EverSource Wealth Advisors LLC boosted its holdings in shares of Dropbox by 88.0% during the second quarter. EverSource Wealth Advisors LLC now owns 1,681 shares of the company's stock worth $48,000 after purchasing an additional 787 shares during the period. Cresset Asset Management LLC boosted its holdings in shares of Dropbox by 75.8% during the second quarter. Cresset Asset Management LLC now owns 15,230 shares of the company's stock worth $436,000 after purchasing an additional 6,569 shares during the period. Finally, Federated Hermes Inc. boosted its holdings in shares of Dropbox by 360.9% during the second quarter. Federated Hermes Inc. now owns 117,852 shares of the company's stock worth $3,371,000 after purchasing an additional 92,280 shares during the period. 94.84% of the stock is owned by hedge funds and other institutional investors.

Wall Street Analysts Forecast Growth

DBX has been the topic of several recent research reports. Weiss Ratings upgraded Dropbox from a "hold (c)" rating to a "hold (c+)" rating in a research report on Thursday, August 13th. Zacks Research downgraded Dropbox from a "hold" rating to a "strong sell" rating in a research report on Wednesday, August 19th. Bank of America reaffirmed an "underperform" rating on shares of Dropbox in a research note on Friday, August 7th. Royal Bank Of Canada reiterated an "outperform" rating on shares of Dropbox in a research report on Monday, June 1st. Finally, William Blair upgraded shares of Dropbox from an "underperform" rating to a "market perform" rating in a report on Friday, August 7th. One analyst has rated the stock with a Buy rating, four have assigned a Hold rating and three have issued a Sell rating to the company's stock. Based on data from MarketBeat, Dropbox presently has a consensus rating of "Reduce" and an average target price of $28.25.

About Dropbox

Dropbox, Inc NASDAQ: DBX is a leading provider of cloud-based file storage, collaboration, and productivity tools. Founded in 2007 and headquartered in San Francisco, California, the company offers a suite of services designed to help individuals and organizations securely store, share, and manage digital content. Dropbox has grown from a simple file-syncing application into an integrated collaboration platform used by millions of customers around the globe.

At its core, Dropbox provides cloud storage plans tailored for consumers and businesses.

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