In just a few days, one of the world’s largest private tech start-ups will go public.
The major financial outlets are very bullish on the deal — for example:
The Street says this company is “Poised to Have a Robust IPO”...
And Seeking Alpha says this event is a big “opportunity” for investors.
But despite all this excitement, one group of investors in this company isn’t cheery at all…
That’s because, as soon as this company’s stock starts to trade, they’ll lose about 30% of their money.
Meanwhile, however, another group of investors in the company is on cloud nine. Why? Because they’re sitting on an expected profit of 142,000%.
Today, we’ll introduce you to this start-up and explain this surprising situation...
Then, most importantly, we’ll show you how to always put yourself on the winning side of an IPO.
$1.1 Billion in the Cloud
The start-up I’m referring to is a service you might be familiar with...
In fact, considering it has 500 million registered users, you might be one of its customers.
I’m talking about the cloud storage company, Dropbox.
Dropbox provides users with a “virtual computer” where they can store all their files, and access them from anywhere.
This way, even when they’re not in front of their home or office computer, they can still access all their business documents, their personal photos, and anything else.
This is known as “cloud storage.”
The cloud storage sector has grown dramatically over the past 10 years, and Dropbox has been propelling much of that growth.
Founded in 2007, the company’s annual sales recently reached $1.1 billion.
And now, finally, the company is set to go public.
30% Loss on IPO Day
But here’s the thing...
Like I mentioned earlier, not everyone is so excited about this upcoming event.
You see, for some of Dropbox’s early investors, the company’s IPO will cause them to lose money.
That’s because, back in 2014, Dropbox raised a large round of capital from a group of institutional investors including T. Rowe Price, BlackRock, and Morgan Stanley.
In order to help accelerate its growth, these firms put $350 million into the company.
And it worked. Since taking that capital, the company has nearly tripled its business.
But here’s where things get tricky…
When these institutions invested in Dropbox, the company was valued at roughly $10 billion.
But now, based on the company’s expected IPO price of $18 per share, the company would be valued at far less than that — just $7.1 billion.
Meaning, as soon as Dropbox starts to trade as a public company, its institutional investors will be sitting on a 30% loss.
I doubt they’ll be very happy on IPO day.
Meanwhile, Other Investors Earn 142,000%
However, another group of Dropbox investors has an entirely different outlook on this IPO.
In fact, these folks are set to make a fortune.
More specifically, they’re expected to make roughly 142,000% on their money...
That’s like turning a $100 investment into $142,000...
Or a $1,000 into $1.42 million.
How could that be?
Well, similar to the big institutions I mentioned earlier, these investors put money into Dropbox when it was private...
But here’s the thing:
They invested at a much earlier stage than T. Rowe Price or Morgan Stanley.
You see, by the time those big institutions invested in Dropbox, the company was already generating more than $300 million in annual sales.
But when the company’s first investors put money in, Dropbox wasn’t generating any revenue at all…
Which is why they were able to get in when the company was valued at just $5 million.
The Early Bird Gets Everything
And that’s the secret to earning life-changing returns from private market investing.
Sure, you could wait to invest until a company has a proven business, hundreds of employees, and millions of dollars in sales...
But at that point, its shares will already be very expensive.
However, if you’re willing to get in early and take a chance on a new start-up, you could put yourself in position to earn 100,000%+ returns — just like Dropbox’s investors are about to make.
That’s why, at Crowdability, we focus on showing you early-stage deals.
These are the deals that have the most upside potential.
Now, to be clear, they also come with added risks…
But that’s why we provide you with various tools and education — the type of resources that can help you weed out the bad companies, and focus only on the ones with the most upside, and the least amount of risk.
You can learn more about how we approach early-stage investing here, in the free Resources section of our website »
Happy investing.
Best Regards,
Founder
Crowdability.com
