Why i'm shorting Dropbox (DBX)

rixard (25)in #money • 6 years ago

Hello fellow steemians, today i am gonna explain you the reasoning behind my decision to short Dropbox. Without delays i give you my Nº1 reason. Because ALL tech shares drop after the IPO. I'm not implying Dropbox isn't going to make it. But from a traders perspective i'm going to short it untill i feel is viable. I think that the first couple of weeks on this tech IPO's, are shorters heaven. Adding to this, we have a scenario of NASDAQ loosing strength, with some analyst waving the bearish flag supported also with this Facebook Cambridge Analytica scandal... All this is pointing for the perfect storm for shorting Dropbox in the next days.

Let me show you some examples of tech companies that went south after IPO. Let's begin with the mighty Facebook, back in 2013.

Started strong around the mid $40's area but quickly went south, and two months later was almost at half it's opening on the $20's region. It pick up from there but it took nearly a year to reach the $40 opening IPO area again.

Now let's see Twitter:

Same story peaked about $50 at opening starts loosing steam after a couple of days, and picks up momentum almost two months after that.

More recently we had Snapchat. Many of you may remember the hype that it generated about a year ago. Dropbox didn't hit the spotlights quite has stong has snap, in my opinion. The result? Well, see it for yourself...

Almost reached $30 on the first hype, then aaaallllll the way dooooownnnnnn... once again!

Recently we had ROKU, not so steep downhill maybe due to a positive earnings report just a month after the IPO, but same pattern here:

Touched the 30$ line, and then "Boom" here we go down.

It appears to be that the 30$ area is where most of these recent IPO's start to fade, but i guess this is just a weird coincidence. But if you are superstitious...