stock is falling in response to news that the cloud-based data-storage company is cutting 11% of its workforce, and that chief operating officer Olivia Nottebohm is stepping down.
The stock slid 5.5% to $22.31 by early afternoon.
“Last spring I made a commitment to all of you to preserve job security through 2020, and it was important to me that we honored that promise,” Dropbox (DBX) CEO Drew Houston said in a letter to staff. “But looking ahead at 2021 and beyond, it’s clear that we need to make changes in order to create a healthy and thriving business for the future.”
The job cuts in part reflect the company’s decision to take a “virtual first” approach to staffing, reducing the need for people such as cafeteria workers. Dropbox is eliminating 315 positions.
Houston said the job cuts will make the company more nimble, allowing it to focus on making users’ experience better, investing in products “built for distributed work,” and improving operations,
William Blair analyst Jason Ader, who has an Outperform rating on Dropbox shares, said in a research note that the announcements “underscore that Dropbox’s business is in a transitional state, in that Dropbox is moving from a roughly 20% grower to a roughly 10% grower as the business prioritizes margins and free cash flow.”
But Ader remains bullish on the stock. “Our view remains that the importance and stickiness of Dropbox’s technology is underappreciated, especially as a workplace hub storing business critical content and facilitating team collaboration on that content – at a time when those capabilities are more critical than ever,” he wrote.
Write to Eric J. Savitz at [email protected]