The long-awaited Dropbox IPO brought a mix of cheers and sighs of relief echoing across a badly battered Silicon Valley desperate for a shiny nugget of good news.

Dropbox went public at $21 per share, having raised its offering price before the IPO. And it closed the first day of trading at $28.48 per share. Here were a couple of well-respected cofounders made good, with a startup born of mega accelerator Y Combinator overcoming all the odds to stage a successful IPO. It helped wash out the bad taste of last year’s Snap trainwreck and offered positive omens for the upcoming Spotify IPO.

For at least one Friday, all seemed right in the world of tech.


If that $28 price holds or goes up, it would offer some relief for investors who were unlucky enough to buy into late rounds for Dropbox. The $21 per share IPO sale valued the company below its reported private valuation of $10 billion, though the first day of trading left it with a $12 billion valuation.

For the moment, that valuation is a bit illusory. The company only sold 9 percent of its stock in the IPO. That’s more than some other big tech companies (Groupon: 4.7 percent; LinkedIn: 8.3 percent; Google: 7.2 percent). But it’s well below the average float of 33 percent for all IPOs between 2001 and 2011. Still, tech companies like to keep the percentage low so it creates scarcity and helps drive up the first-day selling price. Mission accomplished.

In six months, the lockup period will end and much of the rest of the stock could possibly come flooding into the market, a moment that typically causes tech stocks to plunge. In addition,…