Half Moon Capital urges Dropbox to reinstate plan

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Half Moon Capital urges Dropbox to reinstate plan
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NEW YORK - Half Moon Capital, LLC, an investor in Dropbox Inc. (NASDAQ: DBX ), has issued an open letter to the cloud storage company's Board of Directors, advocating for the reinstatement of the previously "deemphasized" Work Family Plan. The investment firm attributes a decline in new paying users and a negative market sentiment towards Dropbox's valuation to the discontinuation of this plan.

According to Half Moon Capital, the Work Family Plan was a significant contributor to Dropbox's revenue growth, accounting for over 50% of new paying user additions in 2023.

The investment firm criticizes Dropbox's management for misjudging the plan as a "loophole" that needed to be closed, a decision they believe has left the company vulnerable to competition and without a suitable product offering for customers with multiple users.

The letter, signed by Eric DeLamarter and Brandon Carnovale of Half Moon Capital, points out that Dropbox's current entry-level plan for two to six users is now 50% more expensive than that of its closest competitor. They argue that this pricing strategy is contrary to the company's understanding of its customer base's price sensitivity and is likely to fail.

Half Moon Capital draws a comparison with Microsoft (NASDAQ: MSFT ), which continues to offer its Family Plan for home and office use at a significantly lower price than Dropbox. The investment firm suggests that Dropbox's share price was approaching post-IPO highs when the Work Family Plan was still prominently featured and the paying user count was increasing.

The letter concludes with a call to action for Dropbox's Board to urgently address the issue and revert to the Work Family Plan to prevent further value destruction. The firm believes that this corrective measure could put Dropbox back on a more favorable growth trajectory.

This news is based on a press release statement from Half Moon Capital, LLC.

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