It’s fair to say that Dropbox (NASDAQ:DBX) was ahead of its time when the company started up in the late 2000s. Years before the onset of the Covid-19 pandemic, Dropbox was developing a powerful remote file storage and collaboration platform. Yet, the DBX stock price hasn’t always reflected the company’s innovative business model.
Granted, the stock has picked up steam since November. Even with that, though, it feels as if the market doesn’t fully appreciate Dropbox’s contribution to the “new normal.”
And what exactly is this new normal? For businesses, it’s a pivot away from people working in close quarters and physical work spaces. The Wall Street Journal even went so far as to declare that the “death of the office desk is upon us.”
Should investors mourn this death, or brace for lasting changes? As we’ll see, the cultural shift to a remote-only workplace means that investors will have to think very differently in 2021.
A Closer Look at DBX Stock
It’s tempting to just assume that DBX stock would have embarked on a sustained rally after the onset of Covid-19.
Surprisingly, that’s not the case. Sure, there was an initial spike to around $23.60 in early June of 2020, but that rally wasn’t meant to last.
After a series of lower highs and lower lows (as the technicians like to say), DBX stock finally bottomed out at around $18 in early November.
Then came huge price surges in December 2020 and March 2021. On Apr. 20, the stock closed at $25.72. Today, it looks like the bulls are back in charge.
Yet, the bulls still have some ground to cover. They managed to push DBX stock all the way up past $40 in June of 2018, so hopefully they’ll be able to reclaim that price point sometime this year.
A One-Way Door
Some folks might be concerned that the business model behind DBX stock won’t offer the same value in 2021 as it did in 2020. That’s because Covid-19 vaccines are being distributed and workers might be able to return to physical work spaces again.
However, the aforementioned Wall Street Journal article seems to suggest that even as safety measures are being eased, some of the “new normal” changes are here to stay.
Dropbox founder and CEO Drew Houston undoubtedly agrees with this sentiment. As Houston put it, “We’ve gone through a one-way door […] This is a permanent shift.”
But is the “death of the desk” a real phenomenon? It’s difficult to provide a data-driven, yes-or-no answer to this complex question.
It’s been reported that 57% of employees work remotely now. However, that varies by industry and employers expect it to diminish to nearly two in five employees working remotely at the end of 2021.
Never Going Back
Still, two in five employees would equate to around 40%. That’s a whole lot of remote workers, which bodes well for DBX stock.
Personally, I expect that some businesses will maintain their virtual-only approach. Meanwhile, other companies will ease into a more flexible, virtual-first framework.
Either way, Dropbox was an early mover in providing a collaborative platform to facilitate these changes. And the company remains a well-recognized and trusted name in this space.
So, don’t be too surprised to see more companies embracing the remote-work culture as Vidyard, a Canada-based video platform for businesses, seems to have done.
In 2021, Vidyard CEO Michael Litt’s stance on this topic is crystal clear. “Your office is your home location where you work,” he said according to The Wall Street Journal. “The way we work will never go back,” Litt added. For him and likely for many other businesses, the death of the desk is quite real — and perhaps permanent.
The Bottom Line
Investors should acknowledge that some changes in the workplace are here to stay. After all, many businesses are accepting or considering remote work for the long term.
Dropbox remains at the forefront of that facilitation of remote work. Therefore, investors can position themselves for potentially strong returns with a long position in DBX stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
