Dropbox's Stock Price Falls: Hackers Compromised Thousands of User Accounts

Shares of Dropbox, the owner of the cloud platform of the same name, fell by more than 2% in after-hours trading. Investors reacted to reports of a breach involving thousands of accounts, in which hackers viewed and downloaded content stored by users.

About 5,000 Dropbox accounts were hacked in August, company spokesperson Tim Rathschmidt told Bloomberg.

According to the agency, some users received an email from the cloud platform stating that their accounts had been accessed without authorization between August 4 and 21. The company informed some customers that their files had been viewed, while others were told there was no evidence of this. In total, hackers gained access to files in less than one-third of the compromised accounts, Ratschmidt said.

According to Bloomberg, the compromised accounts were those linked to Lenovo ID that were not protected by two-factor authentication.

According to Ratschmidt, Dropbox does not expect the data breaches to have a significant impact on its business.

Since the beginning of the year, Dropbox’s stock price has jumped by more than 23%. However, Wall Street is taking a cautious view of the company’s prospects. Five analysts recommend holding the stock, the same number recommend selling it, and only one advises buying it.

This consensus is due, among other things, to stagnant revenue growth, according to Seeking Alpha analyst Andres Verink. Over the past 10 years, the company’s revenue has grown by an average of 15.4%, while in the last five years, the growth rate has fallen to 5%, he calculated. And for the second quarter, Dropbox’s consolidated revenue increased by only 0.9% year-over-year, totaling $631.5 million. Net income for the same period fell by nearly 24%, to $95.8 million.

Another reason for Wall Street’s cautious stance is related to fierce competition: the company charges for access to tools that Google and Microsoft users get for free, Verink explains. For example, Dropbox is trying to monetize its AI assistant, Dash, while Copilot is already included in the Microsoft Office 365 suite. Dropbox launched this tool in 2024, but it still isn’t turning a profit, the analyst notes.

Wall Street's average price target for Dropbox stock is $32.6, which is nearly 5% below the stock's most recent closing price.