Dropbox Doldrums Could Get Worse When Insiders Get Chance to Sell

(Bloomberg) -- Dropbox Inc. could be subjected to a bout of selling with a lockup on the stock expiring Friday.

Some employees and insiders at the cloud-data storage company will get their first chance to sell since the March initial public offering. About 18 percent of outstanding shares are held by insiders, according to data compiled by Bloomberg.

Until recently, Dropbox had been one of the best performing IPOs of the year, with the stock doubling in less than three months. The San Francisco-based company’s shares have languished since the disclosure that Chief Operating Officer Dennis Woodside plans to leave, which overshadowed second-quarter earnings and revenue that beat expectations on Aug. 9. The stock rose 1.4 percent at 10 a.m. in New York and is up 35 percent since the March 22 initial offering.

The number of shares sold short has increased in the past two weeks and now represents about 22 percent of shares available to trade, according to Markit data. That’s down from a record high of 26 percent on the day of the second-quarter earnings release.

--With assistance from Drew Singer.

To contact the reporter on this story: Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper, Morwenna Coniam

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