Is Dropbox (DBX) A Smart Long-Term Buy?

Mayar Capital, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly net loss of -5.26 was delivered by the fund for the third quarter of 2021, and this compares to its benchmark, the MSCI World Index returning -0.01 % for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Mayar Capital, in its Q3 2021 investor letter, mentioned Dropbox, Inc. (NASDAQ: DBX) and discussed its stance on the firm. Dropbox, Inc. is a San Francisco, California-based hosting service platform provider with a $9.5 billion market capitalization. DBX delivered a 12.44% return since the beginning of the year, while its 12-month returns are up by 24.94%. The stock closed at $24.95 per share on November 29, 2021.

Here is what Mayar Capital has to say about Dropbox, Inc. in its Q3 2021 investor letter:

“During the quarter we initiated a new position in the shares of Dropbox. Dropbox started out as a basic cloud storage provider but has developed into a valuable collaboration tool for its many users and has multiple levers for future growth.

Its free storage allowance tempts customers to use the service and the “procedural” switching costs (aka “pain in the back”) associated with moving cloud storage give Dropbox power to move users up the pricing ladder as their storage requirements grow.

Dropbox is more than a dumb drop box, however – since its founding in 2007 it has developed into a high value-add collaboration tool for an active user base, which is in the hundreds of millions. One could say that its large network of integrated apps and recent acquisitions have cemented its development from Dumbox to Dropbox. That only a small proportion of those users currently pay for the service, though growing, gives the company a wonderful runway for growth in the years to come…” (Click here to see the full text)

Based on our calculations, Dropbox, Inc. (NASDAQ: DBX) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. DBX was in 41 hedge fund portfolios at the end of the third quarter of 2021, compared to 39 funds in the previous quarter. Dropbox, Inc. (NASDAQ: DBX) delivered a -20.11% return in the past 3 months.

Disclosure: None. This article is originally published at Insider Monkey.