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Dropbox, Inc. (DBX) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Dropbox, Inc. (DBX)

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Intrinsic Value (DCF)

Current$26.84
→
Intrinsic$68.16
+154%
$44.83$68.16$112.48
Market implies 1% growth for 5 years
DCF analysis suggests DBX could have 154% upside at 18% growth — verify assumptions match your view.
At $27, the market prices in only 1% growth — below historical 18%, suggesting low expectations.
Range: Bear $45 → Bull $112. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →14%16%18%20%
8%$84$91$99$108
10%$58$63$68$74
12%$43$47$51$55
14%$34$37$40$43

Bull Case

  • Bull case ($112) offers 319% upside at 22% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (18%)

Bear Case

  • Bear case ($45) with 14% growth, 12% discount rate
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5-Year Free Cash Flow Projection

Year 1$1.03B
Year 2$1.22B
Year 3$1.44B
Year 4$1.70B
Year 5$2.00B
Terminal$29.46B

📐 Model Inputs

Growth Rate18.1%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$871.60MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is DBX stock undervalued or overvalued?
🟢 UNDERVALUED

DBX trades at $26.84 vs. our DCF-derived intrinsic value of $68.16, implying +153% upside. At a 10.0% WACC and 18.1% projected FCF growth, the market appears to be underpricing the present value of DBX's future cash flows. The bear case ($43.65) still suggests upside, providing margin of safety.

What is DBX's intrinsic value?

Using a 5-year DCF model: Base FCF of $872M, projected at 18.1% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.67B net debt and dividing by 0.32B shares: Bear $43.65 | Base $68.16 | Bull $103.78. Current price $26.84 implies +153% to base case.

How is DBX's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 18.1% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($23.71B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 27.2x.